They should have a show called American Band...have national tryouts for bands...I understand the time constraints of something like this working...but a band could come in...have all the instruments set up that a band needs and they could perform on the spot. Each week have a band voted off...let's get back to the raw real talent and not the high school talent show crap we get spoon fed each week.
There was a program like that a few years back (I think on VH1) where the bands had to play cover tunes.
A real battle of the bands (including bands since to smaller labels) would pose a genuine threat to the established "order" of the entertainment business. They don't want something coming out that they don't own (literally and figuratively).
Say a new form of music called "Grape" comes along. The industry may create their own "Grape" bands but the leaders of the Grape scene won't be signed if they've got too much independence to begin with. Labels want to own publishing. They market celebrity. If they believe that you can make money from their publicity that they won't see (from older album sales) they don't want you. They want to be able to pull the plug on your career. If you can walk away and still be successful after they've abandoned promoting your career, they don't want you.
And if by chance, you do get a second act in your career, the label who dropped you will still make money off your back catalog.
If a new music form comes along (again "Grape"), the industry has to spend money scouting Grape bands and bidding against other labels for them. They also may be stuck with Disco and Country-Rock bands the new kids don't want to hear. They'd rather protect their interest in the status quo corporate music than keep delving into new areas.
The payola scandals of the 1950s and 1960s was because the old guard (ASCAP and Sinatra and pals) hated rock and roll and the dominance it was taking on the charts. ASCAP wouldn't publish rock songs. BMI would. Major labels didn't want to touch it, independents would.
There had been payloa in the music business from the beginning. It is still there. The majors lost market share to upstart labels (and in the case of Elvis, RCA paid a lot to capture that market).
Grunge was a fluke. WEA bought up stake in a lot of indie labels with the hopes of owning a share of whatever became big.
In the end the industry killed with with a one two punch of a "swing fad" (the bands are still around but don't get noticed) and boy bands. The next big thing. They tried this in the 1950s with caypso, bop music, and folk singing as the "next thing after rock and roll".
The music we are exposed to is bad by corporate design. The corporate rock bands of the 1970s were not the best that the era had to offer either.