I also think that the mess that is commercial radio right now has changed the game. For us, the listeners, it’s made it more of a pain. It used to be you’d listen on the radio for good music. The music industry and broadcast industry made some horrible decisions in the 90′s though. They’ve alienated a lot of their audience. Which means that a lot, lot more people have to learn about music in other ways — typically friends or the internet.

This really makes word of mouth more important and also decreases the importance of what the label provides.

Don’t get me wrong. A good producer and advertising still counts a ton. But no where near what it did in say the 80′s.

For every good band that rose to the top in the old system I suspect there are 20 equally as good bands that eventually folded because they didn’t have a friend in a high place.

Friends in high places didn’t make or break every band. And without labels you have no better guarantee that those same twenty bands are going to be able to rise above the backgound noise and be heard.

Without them we can choose what we like

Choose from what? Without the labels (in times past at least) you would have never heard about a lot of bands, so you would have been choosing between the three bands you did know about. The internet makes it easier now, but a marketing budget still helps a lot to get the word out.

Label money also helps with record production. Most bands would never be able to get a good producer (or make a video) without label money.

BTW – I think Smashing Pumpkins did this around 1999 or 2000 in fury at In Sync and Brittany Spears getting all the airplay.