I guess I'm imagining that artists and recording engineers etc. could connect themselves without giving away the majority of the profits to a third party. I don't know enough about the industry to know if this is possible.
Offline advertising still works I'm sure but I guess because of the circles I'm in even "regular" (non-geek) people are willing to use technology to find the music they like. I don't know how hard it is for small artists to sell their stuff on iTunes but like I said sites like TheSixtyOne help but ultimately I think that the role of the broadcaster is becoming diminished (and this is evident in all broadcast industries such as t.v., newspapers, movies, music, gaming and more) as people look for better ways to connect with content creators that don't involve both them and the creators being shortchanged.
You are right about radio being popular but this is more a case of being everywhere. I think it's role is being diminished as you see a lot more people walk around with mp3 players etc. listening to the music they want.
The point I'm awkwardly making is that the value of traditional distribution is not necessarily so valuable now. To borrow an Australian example, it's like Telstra (the central phone company) trying to punish people back into using them and not competitors after years of being shafted when there was no competition.
I'd like to see companies considering initial piracy a marketing cost - the people that don't end up buying probably wouldn't have anyway and you'll end up gaining loyal customers who like what they've seen/heard.