...until you started trying to create a better system. I like the idea of a meritocracy, but it still runs off the idea of there being a definition for "best" - in the case you described, it would be what a majority of users like, which is not that different from what we have now. My answer to the definition of "best" is just a reminder that "best" is always an opinion, not a fact, nor can "best" be made a fact through opinions. They're just opinions; each person's personal belief about something. Not facts. I mean, I find the occasional thing to like in Hannah Montana or the Jonas Brother's music, and I'm downloading Arch Enemy's discography right now (to save you some time: they are a Swedish death metal band). "Best" is relative.
So I think the system for music we have now works... well, I'm not going to say "best," but as well as we can realistically get. Sure, mainstream music media such as radio and iTunes promote more based on popularity than merit, but there are thousands of alternatives, such as musicovery.com , which is one of my favorite websites. Admittedly, these alternatives are often hard to find. But "best" is an opinion - and no matter how you try, there's pretty much no way in our diverse society to convince everyone that your new model is best.
Besides, I'm not comfortable with the idea of bands being notified when they fail to pass a ratings benchmark and users being able to suggest things. Just as I support there being several options in music industry organization, I support bands doing their own thing. There's somebody in the nearly 7 billion people on our planet who'll like it. And, as you sort of admit, your proposed system just uses popular opinion in a new way. I feel that eventually one sound would rise to the top, as it already has to an extent, and bands would start to conform to that sound, just as they already have somewhat. I think they might do it more frequently, even. With just a paper full of sales numbers, there's no one thing telling you why your band's not at the top of the charts. With thousands of users directly telling you "be more like Miley Cyrus, I like her music better," well, I'd imagine that some bands would find that hard to ignore.