I agree -- some of the early Beatles stuff was pretty raw, but it was good.

I also think one can be positive or negative about the labels -- they do seem to have a big impact on "What the artist is allowed to do", so the label's gift of artistic freedom can do a lot to influence the sound of the artist.

For example, Windham Hill seemed to squelch the Spyro Gyra I knew and loved with "Got the Magic". I was so disappointed that the only song that seemed to have the same sparkle was a vocal track called Springtime Laughter that wasn't even one of their compositions and didn't sounds much like them. I think a more appropriate title for that CD might've been "Lost the Magic" (by the way, I still love Spyro Gyra in spite of that comment I just made). People on the board here have indicated they think it was the influence of the label to put the music into a smoother jazz format that was culprit.

On the other hand, the consensus seems to be that Heads Up allows the band more freedom, and after listening to a few productions from that label, it seems that it brings out the best in the artists. So I think there is some merit in being loyal to a label -- so long as they let the musicians do their best...

A faithful companion to the "lower expectations" is the convenience factor. Between iPods, file sharing and cheap CD burners, a lot of people settle for poor quality because they can get more stuff, get it faster and not pay much for it (if pay at all).
Consider the bootleg culture. Yes, there are a few pirates out there who get their hands on quality recordings and make quality copies. But the vast majority of them are cheap ripoffs. If it's a DVD, the image is fuzzy and murky instead of clear and bright. The sound is muffled, but if you can make out every other word, that's okay. You got it for cheap/free, so you don't mind mediocre quality.