It is overwhelming and dispiriting, and I certainly don't pretend to like it. On the one hand, there
is still a good amount of quality music coming out on places like Soundcloud/Bandcamp. On the other hand, many/most of those artists are likely not making much of a living off of it, and that's sad because it means that they produce less music that we might want to listen to because they have to spend their time on other things (
http://www.nytimes.com/2012/09/22/business/to-stay-relevant-...) like working/studying/retraining (my own extremely-niche music is/was something I chose to only do in my spare time, knowing the reality.) It also may be dissuading would-be artists from creating something in the first place, which means we're deprived of those potentially great works. Definitely a negative.
Relatedly, I sometimes wonder about how much of the compromised musical vision (AKA selling out) is actually a myth in terms of pop music itself. The counterfactual is something like: artist X, who is making some kind of music, would have made some other kind of music that they would have preferred to make (because it was more in line with their vision) if they had the economic freedom to do so. Is that really right, or are they 'making' what they would have made anyway? I quote 'making' because of the number of non-music writing pop stars (the aforementioned four guys with all the top 40 hits who are the ones actually writing the songs) is larger than many might imagine. Are those pop stars really just 'celebrities who specialized in music', rather than 'musicians who compromised their visions'? Tool managed to break through the niche->pop barrier in the 1990s despite their decidedly non-mainstream, aurally challenging (and compelling) sound, but does anyone believe there are little Tools just hiding inside of Justin Timberlake, let's say? If someone like that becomes elevator muzak, is that really a 'sellout' when it's designed that way from the outset? This one is hard to disentangle.
Maybe there's another way to frame it. Maybe the problem isn't 'selling out', per se, but that niche audiences, unless you are somehow able to get to the "100 really super duper true fans" or its equivalent, just don't pay the bills very well. We have your Kickstarter and we have Patreon, and we have all that, but does that sustain the number of potential artists - some of whom may create incredible works - in the modern economy? Did it ever? (I'm sure some would-be musicians starved during the actual patron eras, too.)
The Superstar effect (http://www.nytimes.com/2014/02/23/business/winners-take-all-..., http://marginalrevolution.com/marginalrevolution/2010/09/win...) is real and cross-cuts industries; an economy-wide phenomenon. I think it's going to be difficult for these platforms to serve as a real counterweight to that, as much as I'd really like them to, because they're swamped by much larger forces. We've democratized distribution, and some of the platforms /have/ widened the economic net a bit, and I'm glad about that, but the forces are larger than I think they'll ever be able to handle, at least in the US.
That brings us to the next question: is the story the same in still relatively-low-cost-of-living Berlin (where a Kickstarter/Patreon might actually be able
to replace serving coffee, giving the artist the ability to work on art full time), for example? This is especially important for collaborative styles of music. We can tell a starving artist "just live go somewhere cheap", but rural Minnesota is probably not going to have the kind of music scene necessary to engender the collaborative creativity / connections that you're going to get in Berlin (or once upon a time, on the Lower East Side/East Village in New York), and also have a receptive local audience interested in things like live music.
So maybe we add another qualifier: "enough to live in a collaborative, musically vibrant place." Can these platforms ever do that? I don't think by themselves they can really solve that problem. Not all, gloom, though, as I think there might be external solutions worth entertaining:
1) Artist subsidies or tax credits. Hate this one, and lots of other people like do too, as incentives and administration are mess, but worth mentioning since I've seen it proffered before.
2) GBI. Possible superb fix, not going to happen any time soon.
3) Massive development leading to lower rents in desirable areas, so the next wave of those to be pushed out could stay (Ridgewood, Queens is a good example of cheap and artist friendly now, but possibly at risk in 5-10 years.) I wrote a whole post on this (https://medium.com/@opirmusic/fixing-the-nyc-rent-crisis-or-...) Most powerful one, in my opinion.
4) Artist housing: something that has been tried before, and I think is worth considering again. Administration would be the tricky part, but it at least seems possible.
5) Generalized cheap co-housing with shared amenities. I know some companies are working on this, but it remains to be seen if they can make the numbers work in an NYC or an SF. I really like this one, and I hope someone makes it work.
Finally, I'd also add that my original reply was generalized to the job market as a whole; it applies just as much to your C++ hacker who would rather be making interactive art rather than writing device drivers, or to a marketer that is actually good at what they do and would rather being working in politics or something, but takes a job at an ad agency helping to advertise soft drinks to keep their little rat body from going overboard.
To use an example in technology: I understand the appeal of working on complicated distributed setups, using cool algorithms at scale, etc., but how many people really want to work on "thinking about how to make people click ads", and how many are there because that's how you make good money (and by extension, achieve financial safety and independence)?