This is the inevitable back end of the business rising, since the front end (record sales/royalties) have been demolished with pirate downloads.
I've heard all the lame arguments for these ripoffs, and nothing yet has convinced me it's any different from walking into (the recently gone) Tower Records, filling a shopping bag, and walking right out without paying a cent.
The really unfortunate problem I see here in Nashville is the songwriters: They may have penned a platinum hit for an artist. That artist can play road dates and do fine, but the songwriter royalties from that are tiny, and with no accountable record sales aside from I*Tunes and the like, what's the future for these writers? Why do you think it seems like every artist is out on the road every year like clockwork?
Until some workable model can be enforceable in this Brave New Digital World where the owners and creators can be rightfully paid what's theirs, it's going to be a difficult time.
Oh, and that 'old fashioned music industry'? Come here and let me take you to Music Row, and we'll go see where it used to be, along with the Civil War relics. Well, I forgot, we can go to the Opry on the weekend . . . . It's just going to be a while 'till the 'new fashioned music industry' is fully formed.
J o e y