@ What's the New Business Model?
If I remember my economics correctly, the 'old' business model works like this:
Price is determined by intersection of demand and supply
Demand is driven up by promos
Supply is then provided by the labels, via mastering, cd stamping/vinyl pressing/etc., boxing, delivery, and all of the other dull stuff that needed to be done.
The label's business, and function, is to provide the service to the customer for doing that dull stuff - this is, in effect, what they take their 'cut' for, together with pushing up artists' sales.
Problem is, that's not actually needed any more. In a free market, there should be no barriers to entry, and so far there haven't been. The filesharing systems provide an alternate delivery method, which the labels/producers were too slow to pick up on.
Doubly bad for the producers is that now delivery is much easier and less costly there is much greater supply, tending to infinity causing the price _of recordings_ to tend to nothing _over time_. Note my emphasis - it is not impossible to make money in this way, in fact a couple of young bands that I've worked with are doing just this, falling back on the even older model of setting their primary target to be live performance and having a dedicated fanbase.
A 'new' business model must take this into account - remember that people _will_ pay money for stuff that they percieve to be worthwhile. OK, not everyone, and not in the kind of scales that the labels are used to making. But then has anybody stopped to think, what are the labels actually doing to _earn_ those kind of profits?
There will always be a demand for music and entertainment, whether or not the 'industry' exists in its current form or not. In a truly free market then there will be ways to satisfy this demand.
As I recall the record labels have only been around for the last hundred years or so but music has been around a lot longer. Also I've seen plenty of articles about the musicians unions opposing any recording for exactly the same reasons.
Again if I remember my economics correctly this is termed 'structural change' - external factors fundamentally disrupting the market. Exactly what happened to the coal miners, English textile industries, etc. And just like then the government comes down on the side of the big businesses.
Btw, I work producing different forms of content for 'content providers' whether of a musical, online, broadcast or filmic nature.