[xzins]

A song becomes known and a group gets known. It develops a following and a bankroll. Some concert promoter is willing to risk money to have them play in XUY town.

Take out step one and two and ask yourself how likely it is that step 3 will take place.

[lelio]

Take out step one and two and ask yourself how likely it is that step 3 will take place.

Step 3 will more likely take place as:
a) the band is more hungry to tour as that's how they get their money
b) they can charge more for a ticket as the concert goers didn't spend $15 on the CD
c) more people will hear the song as its being actively traded

People don't go to concerts as they look at album sales and say "once it reaches 1M in sales I'm so there"
Now an argument can be made that since the band / label didn't get the money from the CD they're not in a position to fund an expensive tour.

The way I see it the world's going to move towards iTunes and the freely downloadable music by artists that are looking to break into the business.

[Orangedog]

Take out step one and two and ask yourself how likely it is that step 3 will take place.

Markets change with technology. If the music industry would rather lawyer-up instead of changing their business model to keep up with the changes in the market, then they deserve to go under. Someone else will come along and make money in the ways they refuse to. Their grip on the entire distribution chain is vanishing and no small part of the reason is their practice of price fixing which they had to settle out of court. Part of the price they pay is the settlement, part of it is the damage they did to their own business model by illegally fixing prices. Thats the part that their lawyers want to pretend didn't happen.

[SauronOfMordor]

A song becomes known and a group gets known. It develops a following and a bankroll. Some concert promoter is willing to risk money to have them play in XUY town. Take out step one and two and ask yourself how likely it is that step 3 will take place.

You've got it backwards. What group gets NOTICED by the record company, without having already gone the route of playing locally and having developed a following? How else will the talent scout have heard of them?

Grokster & co lets 2nd-tier and 3rd-tier bands have access to a national/international distribution mechanism for their music. If they're any good, they will have fans e-mailing their music to all their friends in an exponential expansion. The ones that are good will then have loads of people wanting to come to their concerts

[wideawake]

There was plenty (and better) music and a countless army of professional musicians before anyone ever invented recording equipment.

Musicians lived off concerts before and they will live off them again.