Artists can still create hype. There's been many dance tunes that I have been chasing, only to have to wait ages for a release of them. In some cases I have heard the tune that much, and the delay before release, has meant I have even gone off the tune and then don't buy it.
You talk about the lack of big bands being discovered - Artic Monkeys sprung from the internet didn't they?
Surely its a good thing that there is now an abundance of tunes around? Good tunes will always get found by someone and get plugged through 'social networking' sites.
If labels are closing because of the interent, its because they haven't adapted to the market. Record bosses were at first ignoring the internet and tried to outlaw downloading. Eventually they realised there was a market for MP3s to be sold legally and the resugence of singles sales to include downloads is evident of the turnaround.