Reason most of the time for EP's with a new unproven artist is $$$. A guy like James is not cheap, so to run a full length is very expensive. Recording an EP is half of a major budget and if the EP doesnt move units, then the label can either do another EP or call it day and not move forward with a full length, or the artist. I dont know their deal. However if I were running a label. All my artists would be signed to 1 record firm with 2-3 options and their first release would be EP's of 6-8 songs for $3-5 to get them out there. If they didnt move units then I wouldnt excersize the option unless they really had serious promise and kids just werent getting their development yet.
If they did do well, then Id move on the option and do a 10-14 song full length at whatever the digital rate is.
I rambled, but yeah, thats basically why alot of labels do EPs first. To save money and right now, money is tight yo!