If I had $250,000, I'd probably just buy SGI. I think that's about what they're worth these days....
Either that or I'd spend $14,000 on a quad G5 with four 30" Cinema HD displays, spend another $2k on software and audio interface, and $9k on mics, monitors, and other miscellaneous equipment.
Then, I'd spend $5k on a head hunter to help me hire a great A&R rep and another $100k to retain that person for two years, plus $30k for insurance, etc. I'd spend $40k to fly/drive them all around the country for two years hunting great acts.
I'd spend $10,000 on a T1 line for two years, paid in advance, for the internet connection for the studio website..
I'd spend $10,000 for somebody else to set up the e-commerce site for me so I didn't have to do it myself.
The remaining $30,000 would get divided in half, and half would be used to pay for the cost of pressing and distributing CDs for sale, the other half for advances for bands. Five bands (over the course of two years) would each get a $3000 advance and $3000 worth of CD pressing/distribution.
The bands would be promoted through the availability of selected free tracks available via P2P, through adwords on google for similar bands, through the occasional ad in R&R, through begging Apple to give them out as the free single of the week, and through mass seeding to radio stations, all done as funding permits.