Except we could reach a critical point where the market has expectations about music being "free" (ad supported or whatever) , and the revenue stream isn't interesting enough for a small number of plays, because people won't pay for CDs, not necessarily because they don't have the will, but because it's come out of the social norm. You end up getting providers who are only willing to push out things for the biggest audience possible, even if it might not be the greatest quality.
It's like when you think about HBO, where people pay a monthly fee to watch. They don't have to pander to the largest audience because they have already secured a nice enough revenue stream.They can care about ... well maybe about pandering to their current audience , but they can afford to try and do their own thing. Compare that to broadcast networks that have to constantly cancel things because if they don't get humongous ratings, it's simply not affordable for them to produce.
There was some article a while back about the same thing happening in app stores. Because of the existence of free apps, people's willingness to pay is greatly lowered, and you end up getting worse quality software across the board ( a couple steps are in between mind you).
So in some "broadcast" world, everyone ends up in a worse situation. The quality is worse, and the smaller artists do even worse. The reason free markets don't magically fix things is that free market theory is based around people being perfectly informed , capable of thinking "rationally", and there being a good amount of providers. That isn't happening.
Granted I've made the assumption that the general trend is towards ad-supported free networks. We might be heading more to a subscription based model, since it seems people are becoming more and more willing to pay for good things in the digital space.