The importance of having a code of ethics as a record label owner is meant to guide you through the notion of demonstrating appropriate ethical conduct when working with artists, music producers, managers, and other stakeholders you are affiliated with in the music business.
And when we speak of "ethics" we are basically referring to a number of principles or perhaps we can say a wide range of convictions that are either perceived as being acceptable behavior or gross misconduct in the music industry.
Ideally, for a record label owner, you should always aim to carry yourself in respectable professional conduct. The supporting reason for this is, any behavior or action which falls in the lines of fraud, dishonesty, and deceit (i.e., finessing the artist) will have a terrible reflection on your character as a record executive.
I think a code of ethics is essential in the recording industry because that's what makes unsigned artists and songwriters decide whether they want to work with you or not. Future upcoming artists will take hold of that, and because of your poor professional conduct. Your integrity will be jeopardized due to a terrible reputation for finessing your artists or music producers.
As a result, many of these stakeholders will not even think of signing or doing business with your record label. They will instead look towards somewhere else where they aren't treated like dirt.
I guess that's because artists with real talent sound the same as everyone else. The “talentless” bring new a whole new sound and performance style that’s never been heard before that’s why it gets popular real quick.