Now don't get me wrong, I think that selling music in the internet age is a fundamentally broken model, so much more than the donate one. At a time where distributing media is as simple as one click, trying to make money off of distribution is just wrong. Take into account how widespread internet access is today, and do the most basic ecnomical analysis, take "Porter five force" for instance and you'll quickly realize how non-viable this model is. Labels who act as middle men between the artist and their audience might have been needed 20 years ago, but today, what are their added values?
Now, if I do not believe that selling music is profitable, that doesn't mean that musicians cannot make money. Here's a simple business model for you: Make money off concerts and use your records as promotion units. Give your music away for free, hope for success, give a concert, make money.
Labels want to scare you into thinking that their distribution model is the only guarantee that music/art will survive. Let's not forget that musicians existed and made money long, very long before technology allowed businessmen in suits to make money off of them.