OP,
You are forgetting that for some artists, the ALBUM is the ART. They may not even DO concerts. The Beatles stopped playing concerts pretty early in their recording careers because they wanted to focus on their albums as their art form. And that brings me to the next point:
What about artists or groups that are retired from active playing or are deceased? They get nothing?
As for ticket sales, merch, and endorsement deals? Many modern record contracts force artists to give up percentages of those now, making album sales more important to artist compensation than ever in order to be compensated.
The industry's main problem is this: I love music, prefer to buy CD's (and would prefer higher-quality physical media above even those), and listen to music forms that are relatively commercial. Yet when I turn on the radio, there isn't a single damn song I want to hear on any of the for-profit stations. I am simply astounded by the lack of taste of the programming directors and the labels that pay them to play their shit. When the most exciting current songs are being made by fashion princesses like The Bravery and Katy Perry, things are bad. I have to believe that even the lowest common denominator likes better music than that, because there have been periods when music was comparatively creative and challenging, and was also massively successful (late 60's/early 70's, early-mid 90's). There's decent music being made, but if I only get to hear it in one-hour blocks from a college radio station DJ, it doesn't have much chance of selling a million records and making lots of money for the industry.
If you look at the top sellers of 2008 (Lil' Wayne, Taylor Swift), they all sold less than 3 million records. That's shit. In the 90's, there were records selling more than 10 million copies. 3 million would have been considered "just ok." And I think that speaks very strongly to the fact that people just don't like the music that is being pushed.
The other problem is a reduction in music promotion venues. For all the talk of the internet, it does not have nearly the power for labels to push a specific act. When MTV was at its peak, a label could pay to play an artist there and be guaranteed that millions of people who liked music would hear the song. But MTV, VH1 and their spin-off channels are no longer promotion tools because they don't play music anymore. Most of the content isn't even RELATED to music. That means no one watches those channels because they like music. And since no other channels have sprung up to replace the mostly-music format, people who like music are left to their own devices to find new music (as mentioned, radio is a joke). They'll find some new music on their own on the internet or by word of mouth, but without having it force-fed on the couch, they aren't going to find as MUCH of it as they did before. And so they're going to hear less new music they like, and consequently have less desire to buy anything.
If the labels are smart, they will start their own television stations and use them for nothing but music promotion. Music television worked for labels in the 80's and 90's, but MTV figured out they could make more money doing other things and left the business. That doesn't mean it couldn't still work for the LABELs. So why not do it again, this time owned by the labels themselves? If they doubt the power of TV, look at iPod and similar advertisements that have made their background songs giant hits, often without even showing the name of the artist in the commercial. What comes after "1,2,3,4?" Anyone under the age of 50 can say "Tell me that you love me more," and its thanks to TV.
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