they'd rather sell ten million of just one or two of those than twenty million albums spread across 200 different albums of varying genres
Well, no kidding. Of course they would. Selling ten million copies each of two albums versus a hundred thousand copies each of 200 albums is far more profitable. For each separate album, you have recording costs, production costs, studio time, perhaps some session musicians to be paid, promotional costs, distribution, supply chain costs, etc., etc., etc. It all adds up.
If you have 200 different albums, that's a lot more expensive (considering all those costs coming in for every single one of those albums) than investing in two different albums. These people, by and large, are in business to make money. If you can make the same amount of money with an outlay of a tenth or a fiftieth or a hundredth of the cost, that's good business and it's far less risky (if you know that one album is very probably going to be a blockbuster).
Look, I'm a musician and I love listening to diverse kinds of music. I also understand that the music business is just that - a business. And that's okay. Everyone who's reading this needs money to live, somehow. At some point, someone made some money - you, or someone who is supporting you. There are a thousand ways to make money, and very few of them are totally noble and selfless. Sorry about that.
This is about the power to tell you what to buy, not to tell you to buy from them
Another thought - perhaps they just want to make lots of money with little risk. Really, what's wrong with that?
Want to make bizarre and experimental music, of interest to perhaps only a small number of people? I applaud you (I've been in bands that did just that). But don't be surprised if a major music label decides they're not going to put in the huge amount of time and effort it takes to distribute and publicize your band, when they know (a) they'll likely lose money, and (b) the mainstream band they already have signed will make an actual profit.
Still don't like the major labels? Then why not start your own open community recording "label". As so many people point out, it is possible to record an album with a comparatively inexpensive home studio. Solicit bands, tell them to send you their music. Be honest with them and if you're going to encourage people to download and share the music for free then tell your bands what your policy is on file sharing, and let them decide if they're okay with that.
Put up a cheap web site to tell people what's going on. Figure out the advertising and distribution somehow - use Twitter, or Slashdot, or anything else that takes your fancy. Distribute using peer-to-peer. I suspect nobody will want to pay full-out hosting charges in this kind of a venture because, you know, bandwidth ain't cheap, even for evil empire record labels. But surely someone can figure that out.
Make it a point of pride that you're going to distribute any kind of music, and get together with people who understand marketing and are willing to volunteer their time. It worked for Linux, because people were passionate, so why wouldn't it work for music?
Seriously, go ahead. Stop wasting energy and time just bleating about how evil the big record labels are, don't even worry about what's going on with the mainstream stuff...put your effort into making a difference. Most people involved in this kind of community effort won't make money doing it, but that's the magic of the Linux community, isn't it? Most people involved in developing Linux have day jobs to pay the bills, and work on Linux because they want to make a difference.
If there are enough people who are passionate enough about this, then you could make it work. Stop complaining, and do something to try and make it different. Carpe diem!