While I am very much for people generating their own content, there is certainly room in the market for large corporate producers as well. If the world depended on individual entities to make everything, we'd be lucky to have anything more than crude hammers and drafty shacks to live in.
You asked if passive consumption of entertainment is really any good; I would venture to say that is serves some purposes. Everyone needs an escape, the human mind simply cannot deal with everything that happens in the world. This content merely provides a simple and safe avenue to reach that. Other people might work out, drink, smoke, go clubbing, waste time on the internets, or what have you.
The main issue we face today is not who produces the content, but how it is owned and handled. Right now, the only way to get something is to pay a pre-defined price for it. This has been a workable system before, since most products required you to pay a static cost for material, large scale manufacturing, delivery, sales, the wages to support all this, as well as a more fluid cost criteria for profits and R&D. With much of the content we want getting digitized, though, there are less and less static costs associated with the process. A system where the majority of the revenue goes to recoup R&D cost, and then moving to nearly pure profit, is a system that can truly support the idea of patronage.
In fact, patronage, or paying what you believe the content is worth to encourage the creation of new content, has been around for a very long time. I believe the idea needs to be updated for modern usage, for instance, by making it really simple to donate, by suggesting pre-set donations, and by adding incentives or benefits for those that do donate, while not penalizing those that do not, but that's getting into details. The fact is, you can have both corporate and individual content generators, because they would target different markets.
A common argument is that patronage would not stop piracy, but I prefer to instead see it as *nothing* will stop piracy. As long as you are selling a product that people will actually, physically have, it will be pirated, end of story. Also, when you try keeping the products out of consumers hands, or otherwise close it down, many people will simply not buy your product because it will quickly grow stale and boring. So, why fight piracy then? Instead, your business model needs to be updated to account for it, and take advantage of the human mindset behind it.
Further, a lot of pirates are actually pretty reasonable people. They will download the game, song, or movie, and if they really like it, they will buy it. The issue then becomes a matter of price. If I get a game that provided me with $30 worth of entertainment, I would be happy to pay $30 for it, but I simply will not pay $60. Some may say that I should not have downloaded the game if I was not prepared to pay for it, but that is simply not how human nature works. We are creatures of curiocity; we like to try and to explore new things, and we always want the latest and greatest. I would even venture say that trying to change this would stifle innovation, and hurt your long term profits more than anything else. The simple fact that the content is out there means that a lot of people will be interested in it. Telling people they cannot have it is like telling the oceans to part, and let you through: When you can do something like that, you get your own religion.