The orgies and coke in studios-age was just an anomaly.
Now, legally it's a lot more complicated than that. But those are all artificial complications that don't mesh with the reality of data on computers. And the law is going to continue to struggle to enforce previous-millenium models of commerce and will ultimately fail not because it's morally bad or anything, but simply because it doesn't fit the reality of computing.
It seems to me that the "new" model of commerce will actually revert to patronage. Creators get paid up front to create something, after which they revoke control of it. This way they get their fair share without needing to struggle against the inevitable sharing of their content.
Another way it could go is that all consumer devices are manufactured for specific applications rather than as general purpose computers. But I don't see that being realistic since the genie's already out of the bottle. People know how to build computers and there's no way to globally stop manufacturing of the components. Even only producing entertainment for specific hardware is unlikely to work, since if it works on one machine it can probably be translated to work on a computer as well.
Sure, they are. By the recording companies.
The argument we, nerds, made at the time is that with that model of content creation and distribution artists were still getting most of their income from concerts, so ideally they could move to a self-publishing model or even give their music for free and still retain most of their income.
I don't know how familiar you are with the music industry, but the amount of money a musician gets (or used to get, I've been decades away from that business) is usually cents per album sold. You get 100K sales? Congratulations, that's a massive achievement, here's your $5K. To share among all the band members. Off you go.
Don't take my word for it, either, read a few interviews with Trent Reznor in the early 00's, for example, when he left the music label he was with and moved to self-publishing (which he was almost doing anyway), here's one where he talks about this head on:
http://www.heraldsun.com.au/entertainment/q-a-with-trent-rez...
It turns out that the internet is a great tool for new musicians to advertise themselves, you have plenty of places that allow you to upload your stuff for free and selling your music is easier now than ever. Of course it requires a set of new skills (a bit of marketing, sales, technical know-how) but on the whole, you have more control and less strings attached than with a record label. Very few people buy physical media any more, so most of the advantages of signing with a company (production, sales, distribution, logistics...) are gone anyway.
And that's the beauty of this: Recording labels are still a viable businesses, they can still offer services the musicians and fans need, all we said is that the balance of power had to shift from the power ties in the offices earning millions to the musicians actually making the stuff.
Others have simply long left the sole clutches of major labels and only associate with them on their own terms, like Wilco and Radiohead (in the rock/ish world).
That said I feel like adding to the general discussion here—with radio music became more accessible to the masses than it ever had been, and in that era musicians largely made their money on royalties (if they were so fortunate) or putting on a roadshow.
Shortly thereafter was it only that people were able to take portable recordings home to enjoy at their own timing.
Prior to any of this, (decently) paid musicians were far fewer. If anyone wanted to enjoy music, they had to afford concerts or recitals, visit or encounter travelling musicians, or acquire the music itself and learn to play it.
I digress a little... but it seems we're coming sort of full-circle from the radio-era model back to it via the streaming-era model. The major difference being the need to not only buy a device to tune in, but to pay an additional and regular fee to access more content/programming than the radio provides.