The real difficulty, and what needs to change, in my opinion, is creating an avenue for independent producers to show their content and STILL have it be considered worth watching. In a way YouTube and Vimeo lets you put your work online which immediately makes it available to a billion people. The problem, though, is that having your work shown on youtube means nothing. Having your work screened on TV means something. Being screen in a theatre means something. Getting into Cannes means something. Having Ebert review your film means something. You can argue that Eberts opinion doesn't mean much, but the fact that he is reviewing your work is meaningful in and of itself.
Hollywood has this huge system to help itself legitimize the work that comes out of it, regardless of the actual quality. There's no real system that helps individuals who want to cut out the middle man effectively convince strangers to watch their content (afaik). There has been an insane amount of growth in the number of film festivals that exist in the last 5 years, but all that does is lessen the value of screening your film in a festival. (Wanna see? Just check out withoutabox.com). Also it's just growth that in my opinion tries to emulate and validate the current system.
So what I think is needed is something like Netflix, or a bunch Netflix-type sites, that serve curated and independently produced shows and films. Each site would serve a specific audience, and each site must be careful in what it chooses to show. It must legitimize itself to "normals" as a valid mode of entertainment, and also to artists and filmmakers as a valid mode of distribution. This, I believe, would allow for more diversity and more democracy in content creation, and is a viable way to legitimize quality content that would otherwise get lost in a sea of Internet junk.
Edit: grammar and some messed up sentences that didn't make sense :)