I wish people would stop calling it that. Most often, they are actually referring to the record companies. This might seem like splitting hairs, but it’s not.
The record companies are struggling to find their way in this modern world. Their business model is old and outdated, and the bloat of their own selves is choking them. They are barely holding on, and want little more than to either roll back time, to a better day (for them), or force their business model to still somehow work (which goes against the whole “the government is of the people, by the people, for the people” thing.)
The guy with the guitar, playing on the corner with his hat on the ground, is in the music business. He is creating content, has found an outlet, and it making money. While he makes new content, he has a reasonable chance to make money. When he stops, well, those memories linger for only so long, as do the chances of his being compensated by fans.
Sure, long ago, record labels played a key role in connecting musicians to fans. They provided that service, of funding the recording, of distribution, of getting the music to the point of sale. But wordpress and other free web hosting sites do that now, too, and they do it for free. That exclusive service that the record companies provided, well, it’s not so exclusive any more. The music industry is still thriving, people are still making great music and are being compensated for it — it’s just the record labels that are being left by the side of the road.
And I’m OK with that. Musicians that generate good content will get my sales, generally, be it on a CD, or a DRM-restricted format like in iTunes, or free and clear MP3′s that they release to the world.