Are record labels even necessary in modern hip-hop?

Just like video killed the radio star, the internet killed the record label, and thank God for that. In the digital age, there's very little that prevents enterprising creatives from reaching their desired audience, provided they have consistency and tenacity. Instead of waiting to get noticed in a hyper-competitive field of contenders vying for the same position, sites like Spotify, Sound Cloud, and YouTube have thoroughly democratized the process of earning a comfortable living through making music. No more is the internet's impact on independent artists more visible than in the hip-hop genre. 

Artists like Russ, Tech N9ne, and various others have found unfathomable wealth and fame by avoiding major labels. The former in Atlanta's Russ has provided a contemporary blueprint for reliably generating six figures a month through releasing records independently. However, since a host of up-and-coming hip-hop artists are from impoverished backgrounds, the idea of signing away the long-term rights to their lucrative hit songs for immediate cash is too tantalizing to ignore. In the video linked above, Hip Hop Madness' YouTube channel explains why record labels are arguably the biggest scam in rap music.