Seriously, diversity is something record companies can't afford anymore - not the majors, at any rate. I'd go to this article, posted at Linux Journal, which quotes a Newsweet article (July 15,2002) by Steven Levy saying "So why are the record labels taking such a hard line? My guess is that it's all about protecting their Internet-challenged business model. Their profit comes from blockbuster artists. If the industry moved to a more varied ecology, independent labels and artists would thrive--to the detriment of the labels, which would have trouble rustling up the rubes to root for the next Britney. The smoking gun comes from testimony of an RIAA-backed economist who told the government fee panel that a dramatic shakeout in Webcasting is "inevitable and desirable because it will bring about market consolidation." That's really it in a nutshell. "Market consolidation" means the less artists they have to promote, the less ultimate dollars they'll spend. The smaller the playlist, the greater the chance that audiences will buy something from that playlist alone - because that's all you'll be able to find out there.
3) Indentured Servitude
In one of your interviews, you mentioned that contracts with the music industry should be likened to indentured servitude (must produce X albums, but the label has the final say on if what you produce was acceptable). Why do you think so many artists willingly accept these terms? What can be done to promote contracts that are more fair?
Ah, you're into a two-fold problem here. Fold one is that the record companies hold all the cards; if you want to be famous, you have to go the mainstream route. If you want huge success, you have to go the mainstream route. If you want worldwide success, you have to go the mainstream route. And until we see our first Internet & Live Shows Only artist sell a million CD's without a label deal, the major labels will be the only mainstream route available. Don't quote Grateful Dead statistics to me - they're the exception, not the rule.
Fold two is that everybody wants to be famous these days, and enough is never enough. Let me use an example: in their mid-20's, my grandparents were thrilled to have a small refrigerator (without freezer) and gas stove with a tiny oven. The house had one TV. My parents assumed they were due a bigger fridge with freezer, four burner stove and three-rack oven, dishwasher, toaster, mixmaster etc. The house had two TV's. My generation went for all that, plus microwave, automatic coffee maker, food processor, and a TV for living room, bedroom, and kitchen. The next generation assumes they're due all of that, plus espresso machine, bread maker, etc. And there's a TV in pretty much every room.