What internet distribution? You pay on the internet the same way you pay anywhere else, the major labels own the front webpages, search engines etc. Even if a video you have goes viral (because your cat can talk or something) then what? They fade as fast as they rise. The best way to get actual fans is to play gigs and push a website to your followers.
Well that's just it, kind of what I meant, but they both use each other. Play gigs, get people to visit your website. Get lots of visits, get gig offers.
Back in the sunset strip days of L.A. Hair bands (at least from what I heard, I was probably 5 at the time) a band would play lots of shows, and lots more shows, and hand out tapes to people at these shows to copy and hand out to their friends and so on until the tape was so crusty from being re-recorded it was unlistenable. Tons and tons of demo tapes being circulated by a fanbase and a lot of shows for some industry type to come scout, eventually someone would take notice.
Nowadays mp3s would take the place of demo tapes and youtube would take the place of shows - at least as far as having some way to let people see what you are doing - and most major label recordings are turned 'live' for a tour by adding a few nameless backup musicians (for the look) and playing a backing track (for the sound). At least if the MTV music awards, grammys, and so on are to be believed that looks like the formula to me.
I don't think KP or JB spent a lot of time paying their dues at shithole clubs garnering a fan base to get label attention. I don't think Kelly Osborn or Lisa Marie Prestley Jackson or Ashley Simpson would have had label support if not for family ties. The label attention created them a fan base, not the other way around. So in that regard, the label created their product for which they are just a stage prop, and the label should be able to tell them to do exactly as they are told if they want to continue being pimped. For every JB out there getting pimped, there are a million other talented 8th graders in school choir who can get a cute haircut waiting to take his place if he doesn't do what he's told.