Sure there's still talent around, but I think the main reason the music industry ain't what it used to be is the complete fragmentation of audiences combined with the blockbuster mentality of the industry. You can't have it both ways without surrounding yourself with bland, prepackaged clones with the shelf life of an old tangerine...
I'm not sure fragmentation of audiences has occurred (yet?). If you're right, however, it spells the end of major labels. Now, I'd say "good" to that, because I've never bought much stuff that was actually produced by the majors. But if they go, I wonder what happens to the music (and masters of) all the great indie companies the majors bought in the fifties, sixties, seventies, eighties and nineties? Library of Congress?
MG