This is my opinion on the future of music, even if it takes another decade or two:
[ol]
[li]For new artists, they will perform locally to get themselves known and start making an income.[/li][li]To expand, they will freely distribute recordings (MP3s, etc.) to get themselves more widely known. [/li][li]Existing artists will freely distribute their music to encourage sharing to attract new fans.[/li][li]Radio will be used to help advertise their music, by playing popular songs (much like today.)[/li][li]Artists will make their money from performances, concerts, merchandise (e.g. T-shirts) and collector items (e.g. CDs)[/li][/ol]
Of course the major labels are the ones that will lose out eventually, since if the artists make their money directly from its fans, then some of the middlemen get cut out… Whoops. 
In the meantime, let’s see how long the labels last trying to prevent points #2/3 above and keep up this virtual DDoS war . . .
Put it this way, if an individual artist is left with a profit of €2 per concert ticket after all other costs, has a typical concert audience of 10,000 fans and 10 concerts a year, that’s a gross income of €200,000 per annum. Of course, small public performances, selling merchandise and collector items (such as what CDs will become), will give them a little extra. This leaves them with 355 days a year to record more music, find ways of attracting fans for future concerts, relax, etc.
A few other facts worth considering:
If the labels are complaining about downloading costing jobs, just think of what iTunes, Amazon MP3, etc. are doing to high street music shops selling CDs.
If the average person decides to quit or change job, they don’t earn any money from all the years of hard work they may have carried out in that job. A well known music artist on the other hand can still earn a large income from royalties even if that person never sings or plays an instrument again. I know the music industry says “What about when they retire?” Well, the average person still needs a way to survive when they retire, e.g. pension.
What happened before the invention of the Record? Music was still produced, but the main difference was that artists made money by performing their work. Unlike today, they couldn’t make money selling recordings (lyric sheets sales was about it), they didn’t have radio to promote their work and public performance sizes were practically limited to how far away the instruments could be heard (due to no speakers.)
