Ed Felten’s analysis of the recent Penn P2P study attempts to find some common ground between labels who want to retain market value for music and consumers who want to support artists on a sliding scale. In all of the excellent scenarios Felten focuses on the "total welfare" of the community by assuring artists a market, and therefore incentive to create.
Trouble is, with artists receiving little or no money from record deals right now, the incentive really comes from audiences who directly support artists in the form of ticket sales, merchandise and memberships. Until artists control their labels more directly, there’s little incentive for an artist to point audience members at any specific form of purchase, beyond meeting expectations set by their label for number of units sold.
The good news is, you’re in a better position than ever before to create your own label and reap all of these benefits.