"So? This is how it has been for centuries. Call it the invisible hand meets the art world. They can get jobs being music teachers. They can record using vintage equipment, like Blake Schwarzenbach did (used 4-track and 8-track recordings while he wrote for GamePro)."

Again, you are making choices for them. You don't see anything wrong with this? Nobody is guaranteed a living. However, you should be given a chance. You are taking away that chance completely.

"when the artists then try a new direction for a second album and the label is hesitant to financially support an album unless fans move the product in the first two weeks."

This is the consequence of going with a label. The label wants to make their money back in the short-term and you, as an artists, give away your creative control. It's almost the same as getting VC for your startup.

Over time, people with your attitude have pushed many artists to go with big labels. They have little to no chance making any kind of living on their own (because people just share their music and don't pay for it). So, the label offers them money and some sort of living.

" I am a founder of a failed start-up company that would work with artists in a way that was designed to supplant the labels and exploit long-tail effect, etc."

I hope you weren't charging any money, because you sure don't seem any better than a regular label.