Well having left being a session musician in the 80's to become an investment banker to make a living and then coming back to being a session musician(and part time teacher) in the past five years, there are basic reasons why you see this. And I actually see low-ish quality recordings done early on as a very good thing for musicians. After all what's the point of spending thousands on music that is saved from the console and then ripped to mp3's and put on an ipod (I see this done all the time). Ultimately super cheap and abundant recorded music is very bad for record companies and those that can't play live but good for the musicians that can play live. It's just a question of how we (musicians) work the transition over the next 10-15 years as to how it will come out for us. I contend that selling music as tables and chairs (ie CD's and vinyl) has never been all that great for musicians. After all, at the very least, to have a long career it's always HAD to have been a better deal for the record company than the musician, which is why I started doing something else.
In old media (aka mass media) content was difficult to create but once you made it, marketed it, and distributed it, consumers were pretty easy to come by because the lack of content created its own demand. It mattered much less if you were actually talented, than how you were produced, marketed, and distributed as an artist. This is a perfect situation if you are a record company because the expensive stuff is production, promotion, and distribution, which has a lot more to with money than music. Looking at it another way, think of attention as a commodity. In mass media days attention was fairly abundant provided you could get something decent out to the end user, a newspaper, or CD, or even live performance and promote it well. This is bad for bands because bands could only play in so many places and situations, for example a band can't play in 10,000 cars at the same time. Again perfect for a record company. To an economist you could say after a certain threshold, attention becomes abundant (which means cheap to an economist), and so for every person that actually buys a CD the overall cost you paid, in studio time and promotions, to get your chunk of attention, the overall price goes down. So it paid to put money in production, but especially into promotion, and distribution.
With New Media, we fight for the same attention, only with New Media investing in the same sort of infrastructure becomes a bad investment. You can buy a bigger and better studio and print more copies, promote the heck out of it, but the people on the street are too distracted by the thousands of other content providers to notice you. So old media is like a soup line where you have not much soup to begin with, and even when you get some soup, you can only choose between two or three pots. New Media is like a 2 mile long salad bar, where you have so much stuff that you aren't ever really sure if there's actually any ranch dressing in there, and even if there is you may have to walk a mile to find it. That's why Google is worth so much money, because they help you find the ranch dressing you like. Now a natural result of all this content (excess supply) is hyper deflation for finished content, again very bad for record companies, newspapers, etc. But not necessarily bad for the artist, because artists are not tied only to producing finished recordings, but because of hyper deflation on finished recordings those that are tied only to finished recordings probably will have a much harder time making money. Apple figured this out a while ago which is why the most successful "record company" today is actually a hardware/software company. They sort through things and help create a communities, which gets people to their site and hence gets a chunk of people's attention. So they don't market the artists, rather they market the communities. It's why they market "Rip, mix, burn." and not XYZ artist like traditional media.
Well anyway, I guess that's enough of an economics lesson for the day.
