Of course intellectual property should not be free. Musicians are making it on their own now thanks to the freedom they can get from being online. People buy CD's. The copies are not preferred because people also want the case, the notes and the original CD.
Junk may not be bought as often, which is what mostly sees the light of day thanks to the labels.
A record company is a private business. What would you suggest, some sort of entitlement program or affirmative action for niche artists forcing labels to sign and promote artists they have no faith in?