The Music Industry is not Broken
Media outlets tell us on a regular basis that the music industry is "broken" because CD sales (based upon sales reports from the majors, apparently) are on the decline. Pundits, celebrities, musicians ... actually, just about anyone who makes, buys or profits from music ... have chimed in with reasons for the current state of affairs and suggestions for fixing the "problem".
I'd argue that the decline in sales of CDs by the majors is symptomatic of an increase in the overall health of the music industry. Sure, the majors are taking a hit. So what?
Look at the bigger picture. Over the same decades that the majors have been scrabbling to protect their turf, the MI industry has benefitted from economies of scale to produce gear that's more functional and more accessible to more would-be artists than at any time in history. There's no need for an artist to grovel for a label contract (basically, indentured servitude) when they can afford to own their studio.
Over the same period of time the computer industry has mutated into (or was absorbed by) the consumer electronics industry; the internet, which began as a tiny research project connecting a computer or two at each of a handful of universities, has matured into today's dominant medium for personal communications and publication; meanwhile, the cost to manufacture a music recording in small quantities has dropped well below a dollar, given a very modest investment in equipment (the same equipment, in fact, that virtually every computer owner already has regardless of whether they use it to produce music.)
Meanwhile, current and former indentured servants (a.k.a. signed artists) have launched their own grassroots campaign to explain to a broad audience the true nature of a recording contract. Folks smart enough to do the math have realized that their chances of making a decent living at music are actually better as an unsigned artist; enough genuine "artists" are doing this that they seem to be depriving the majors of their lifeblood. (I don't buy the argument that grooming pretty people to mime something resembling music is cost-effective.)
What has changed is that the majors no longer control the entire industry. All those indie labels and all those folks with bedroom studios are creating product that effectively competes with the majors. It doesn't seem like the little guys ought to be able to make a difference, but there are so many small and tiny producers that they, in the aggregate, make a difference to the overall market. What's hurting the majors is not so much that folks are illegally downloading Metallica songs, but rather that the availability of competing material from so many diverse sources is taking time and attention away from the major media outlets and big-box distribution channels upon which the majors depend.
Do you think that the majors ought to broaden their base to include the small acts that are now self-produced or on small indie labels? A few guys in a garage have a better chance of handling that end of the market. The majors can't deal with the small acts. The majors' production costs are astronomical by comparison with the guys in the garage; there's no chance that the majors could make any money (not even for the label, never mind the artist) with a small act.
The next paragraph is pure speculation, but it's related to the subject. Take it with a large grain of salt.
I suspect that what the majors will attempt to do, over the long run, is (through technology and legislation) to get a piece of the new dominant distribution channel: the internet. They're certainly working hard right now to establish a justification for doing so...