That's the problem. Some indie artits may do this, but not nearly enough, due to Apple's approval process. Most actually are refused as you mentioned, and this is why itunes is not a viable option for unsigned musicians, as many sites are not. The industry is catered to major label musicians, and FCC regulation stricken. It does not meet the needs of the unsigned musician. Checkout Pandora's plight.

http://www.portfolio.com/views/blogs/the-tech-observer/2008/...

http://blog.pandora.com/pandora/archives/2009/07/important_u...

http://www.crunchgear.com/2009/07/14/pandora-teams-up-with-r...