People are turning away from commercial radio in droves, though, thus the growth of satellite radio and music sharing on social networking sites. Certainly there will always be mass tastemaker markets, as there will always be big media, but I don't think they'll be record labels. They already aren't. They're banks, beverage manufacturers, cable moguls, they all just happen to own the remnant of a record label, which used to be able to stand on its own. Mass music marketing is now and will be a function of the larger mass media, not an industry unto itself.
What we've seen, though, in the last 20 years is that as media becomes massive, niches sprout in exponential relation to that consolidation. What we haven't seen is the monetization of those alternative channels (man, I don't even have an MBA, forgive me the jargon). That's the missing link.
In the 1950s, five labels controlled well over half the industry. By the end of the 1960s, indies controlled that share and more through innovative promotion and taking risks that proved popular with consumers. By the mid-1980s, the biggies had caught up, and consolidated well enough to sustain a two-decade chokehold on the industry.
But every one of these biggies, as shown by their clinging together in the life-raft of the RIAA and their running behind corporate overlord skirts at every new media threat, are completely clueless in the new market. They are still a vestigial force, but there's a massive vacuum that waits to be filled in the public appetite. Steve Jobs (and dare I say Al Gore?) helped fill part of it, and what the rest will look like is pretty high up in the air at this point.
My main thrust, I suppose, is not to look at the status quo and assume there aren't fatal fault lines, or even cracks in the pavement where hardy weeds can grow, and one day split the damn thing apart. The new phase of the music industry will no more unseat the next batch of boy bands than the Sex Pistols could unseat Donny Osmond. But that doesn't mean there isn't a massive market waiting to be served.