The difference between a demo recording and a master is that the demo has to sell a song or artist to a publisher or record label; a master needs to be something the public will buy.
In the days before home recording equipment became as good as the equipment pros use (now it is the same), it wasn't possible to make a recording of master quality at home.
So if you came up with a good song, you would make a rough and ready recording any way you could.
You would then try to get a publisher to listen to it.
If the song was good enough, then its merits should shine through however average the recording.
Same with a band promoting themselves to a record label.
These days however, things are different.
Because it is now possible to make a recording of master quality at home, this has now become the standard required for a demo.
If you can fool an industry professional into listening to your rough and ready demo recording, they will feel insulted that you didn't make the effort to produce something better.
They won't pay any attention to your song and you will be shown the door.
It is possible to argue that rough demos are better because a songwriter can concentrate on what they do best rather than diverting their effort into production.
But currently the industry expects master-quality demos, so that is what you have to create.
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