The music industry isn't really dead from the point of view of the corporations that own it. It's all about how many units sold. The music biz could care less about talent, artistry or quality, all they want are salespeople which is why we have the Madonnas, Lady Gagas etc. No talent, but boy can they sell units and such and make the executives a ton of money. From any other point of view it is long dead.
I believe part of the reason is due to people, that is to say most people (present company exempted) are not into music anymore. Most people today are passive listeners at best and don't really pay attention to meaning behind the music if you will and can't recognize something fresh and exciting either. Most radio stations play what they are told to play (yes the whole payola thing never went away) and so we hear the same stuff over and over until it becomes nothing but noise without substance. Nearly gone are the days when music had purpose and soul and meaning that could be seen a mile away. Music itself is still that way and always will be, but I'm talking about true music, music written and created with purpose other than to sell units, music that is still in the control of the artists.
Fortunately we still see occasional signs of life with both new and old artists around such as Muse, Rush, Sarah McLachlan, Tori Amos, Neil Young to name a few and we can even give a nod to artists such as Rage Against The Machine and Silversun Pickups, both of who may not sound too different from a lot of others, but have that little special something or true artistic purpose behind it all.
That said, one really has to be an active listener to find these points of hope these days. Most folks now just turn on the radio and walk away and/or just allow themselves to get dumbed-down and latch on to stuff like Lady Gaga and such following the lemming in front over the cliff and invariably what happens in rather short order is "acts" such as Gaga and Cyrus etc., die a quick death and it's on to the next.
To those of us who still listen to music actively we have our many media forms of our artist we like both from yesteryear and maybe even a couple from today.
Everything said here is only my opinion, (but I also used to be in the industry on a local level and worked for radio too so of course my opinion is colored).