"Selling out" refers to the compromising of one's integrity, morality and principles in exchange for money, 'success' (however defined) or other personal gain. It is commonly associated with attempts to increase mass appeal or acceptability to mainstream society. A person who does this, as opposed to continuing along his or her original path, is labelled a sellout and typically regarded with disgust and immediate loss of respect. Selling out is often seen as gaining success at the cost of credibility.
In various political movements (usually communists and anarchists), a "sellout" is a person or group pretending to adhere to a genuinely pro-working class ideology, only to follow these claims up with actions directly contradicting them, often (whether actually or implicitly) supporting capitalism. It could also apply to any revolutionary group originally claiming to fight for the people of a country, but acting rather differently upon coming to power, mostly because the covert goal of the revolution was not to benefit the people of the nation, but for the national government to be overthrown so that the revolutionary leaders could themselves have the perks and prestige of being in power.
The phrase is frequently heard in the musical community, where it is used to imply that an artist has compromised his or her artistic integrity in order to gain radio airplay or obtain a recording contract, especially with a major label. Often, the label will force a particular record producer onto the performer, insist on the inclusion of songs by commercial songwriters, or the label may even refuse to release an album, deeming it uncommercial.
The term "selling out" is used in a similar sense when discussing the movie industry.
In Wayne's World, Wayne breaks down the fourth wall, mentioning he would never sell out; in this case, to make his public access television show more successful. To humorously contradict himself, as he talks, he displays several products, with the corporate logos highly visible such as Pizza Hut, Reebok, Pepsi, and Doritos. Wayne and Garth also spoof a Nuprin commercial where it is black and white, save for the signature little yellow Nuprin pills.
Stand-up comedians occasionally face accusations of selling out. Comedians who start out in comedy clubs might often use foul language and blue humor in their routines. A comic who alters his or her routine by "sugar-coating" his language and using less-offensive material to obtain mainstream success may be accused of selling out.
George Carlin has been accused of being a sell-out for appearing in television commercials for MCI's 10-10-220.   Carlin had previously spoke of his dislike for MCI's commercials in his album Back in Town. In his album You Are All Diseased, which contains rants against advertising and business, Carlin admits the dichotomy but makes no attempt to explain himself, stating "You're just gonna have to figure that shit out for yourself". In interviews, Carlin revealed he appeared in the ads to help pay off a large tax debt to the IRS. 
An artist may also be accused of selling out after changes in artistic direction. This conclusion is often due to the perception that the reason for the artist changing artistic style or direction was simply potential material gain. This ignores other causes of artistic development, which may lead an artist in new directions from those which attracted their original fans. Artists' improvements in musical skill or change in taste may also account for the change.
Other times, artists resent the term on the grounds that the perceived desire for material gain is simply a result of the band seeking to expand its message. For example, when questioned about signing to a major label, Rage Against the Machine answered "We're not interested in preaching to just the converted. It's great to play abandoned squats run by anarchists, but it's also great to be able to reach people with a revolutionary message, people from Granada Hills to Stuttgart".
Other bands (including those without politically-oriented messages) may also reject the term, on the basis that not going mainstream or signing to a bigger label -- in order to prevent "selling out" -- (a): limits a band's ability to address their wider audiences, regardless of whether or not there is any real artistic change, and/or (b): arbitrarily hampers the artists' course of mainstream success, with the assumption that mainstream success must be against the artists' intentions. When confronted with the accusation of selling out in 2001, Mike Dirnt of Green Day claimed:
"If there's a formula to selling out, I think every band in the world would be doing it", he said. "The fact that you write good songs and you sell too many of them, if everybody in the world knew how to do that they'd do it. It's not something we chose to do."
"The fact was we got to a point that we were so big that tons of people were showing up at punk-rock clubs, and some clubs were even getting shut down because too many were showing up. We had to make a decision: either break up or remove ourselves from that element. And I'll be damned if I was going to flip fucking burgers. I do what I do best. Selling out is compromising your musical intention and I don't even know how to do that".