True to an extent, but records are great promotional tool, and rather expensive to make if you don't want it to sound like poop. Perhaps something like $10-25k on the very low end for something half-way "serious", and that's assuming you're not going all Chinese Democracy and can actually cut the thing in a week or so. Then it has to mixed, mastered, art prepared, etc.

Most small-medium time artists can't afford to front all the expenses. If no one buys the records, no record company will give the band an advance. Even if most records don't really generate any direct profit for the band, getting the production bankrolled is a pretty big benefit.