This is another way of saying the salaries would be lower and there would be no benefits or permanent career path in the arts. The arts would become a hobby that people do before they get a 'real job' that is able to support them as adults.
What I don't think you understand is that those big-budget shallow pop pieces support the rest of the industry both directly and indirectly. Look at software for an example -- your little open source effort is in fact bankrolled by the open source ecosystem that is subsidized by Facebook, Google, big VC money, etc. The high salaries in tech are held up by the demand that these large houses create. When you cut the top of the pyramid off an industry, the result is recession -- an overall deflation of the rest of the labor market. Look at what happened to even unrelated industrial concerns in Detroit when the big-three auto makers left town. The entire economy of the city collapsed, not just car factories.
I'll give you a concrete example: all the cool synth and instrument gear musicians use to innovate. It's a good example because I know people who work for Moog Music and other firms in those areas. The majority of those firms' revenue comes from larger and deeper pocketed artists and other creative concerns that buy the latest-and-greatest and the big-ticket items. Kill off all that and Moog would go out of business and all the little indie bands would no longer even be able to purchase gear.
Your ability to produce an album or a movie on a Kickstarter budget is in fact subsidized indirectly by way of demand generated by the larger and deeper pocketed side of the industry and the productive economy of scale that it helps create. Industries are ecosystems and the bigger concerns within them are primary producers -- what happens to a forest if you cut down all the trees?
I agree that copyright is in need of some reform, but the radical anti-copyright and 'pirate party' position is just insanely naive and would completely destroy art, music, and literature as viable career paths for anyone. It's the kind of position you encounter from people who have zero understanding of economics and/or are really naive about human nature (a.k.a. have never met a sociopath).