Not all that long ago the things we traded in the free market were solid things. Actual solid products.
The free market regulates it's prices naturally with supply and demand. The times that we see the free market being thrown out of balance is when there are monopolies that can apply their own artificial scarcity to whatever they're a monopoly in (I.E, diamonds). They apply an artificial scarcity by assigning whatever price they want to it- this is possible because they're a monopoly.
When it comes to imaginary property (Selling ideas, concepts, bytes.) you HAVE to apply an artificial scarcity to it because the supply is unlimited. In mass this is a problem for the market, because it throws things off balance, the same as monopolies do.
I see the file sharing frontier as the market correcting this imbalance. It's restoring order. There is unlimited supply and as such the price must go down due to the natural cycle of the free market. This is exactly what is supposed to happen.
Furthermore.. Musicians do not need record labels anymore. They used to when we used vinyl, because no one could just make records in their house. How much of record sales goes to the record label? A lot. Most of it, I'm sure. If the artist did it themselves, they would make much more money. Does this mean they need to burn a bunch of CDs in their house? Does this mean they need to hire someone to burn a bunch of CDs? No, not really. No one uses CDs anymore. We all have mp3 players. The media that music is written on is different now, and in a form that's even easier for the artist themselves to create and distribute.
Without record labels, and even without CDs, what does that leave artists with? For starters, what do you think the profits of advertisments on a very popular musicians website are? Enough to support a small family I'm sure.
And then you have to take in account merchandise- Think about XKCD. This guy writes a short unartistic (though witty) comic three times a week, and he makes a LIVING off of merchandise, and doesn't even have any advertisements.
The combination of going on tours, advertisements, and merchandise is enough to make any independent 'free' artist a very nice living.
Will they be super millionaire idols? Living like kings like they are today? Probably not. But that's fine, isn't it? Why should musicians make more than our best engineers..?
Or a more logical approach: Why should musicians make more than any other type of artist??
I think the stand of musicians now is unnatural. They are manufactured by the media to fit demographics in bulk and then live like kings. This isn't the way it should be and it won't be like this forever.
Things are simply evening out. The big media corporations can try all they want to reverse the flow of technology, but in the end the free market and 'the balance' are boss.