My guess is that the music industry's biggest problem is their failure to adapt to the need for new marketing. Listening to music radio on my recent car trip (I rarely listen to music radio otherwise) I basically heard no "new" music except for a bit of dance and hip-hop music. MTV doesn't play videos anymore. Instead of exploiting the desire of people on the internet to promote their stuff for free, they're obsessed with royalties and DRM. It's bizarre to me that an industry notorious for its payola scandals - paying radio stations to pay their crap so that people can hear it for free - simultaneously obsesses about the possibility that people might actually throw up a song on the internet so that people can hear it for free. It's called promotion.
There's a lot more decent music floating around than when I was a teenager, and you can find it if you spend some time looking for it, but there seems to be absolutely no mainstream media marketing or play of most of it.