You make some great points, but I think the "Internet Apologists" school of thought is closer to your "Crowd Patronage" idea than you realise. As you said, recorded music is fairly recent, but gathering around to enjoy a show goes waaaay back...and I think it's a great business model going forward.
One great example of this in action is Hoodie Allen. He releases all his music free on Soundcloud[1] and Youtube[2], where he funds/makes his own (pretty impressive) music videos to gain his audience. No record label required. His music is on iTunes, but I'm guessing the real money is made in concerts.