John you have pretty much nailed it as far as I am concerned.
The way I see it is this. This business has always been very cut throat and competetive. Today is not any different. However in yesteryear there were fewer musicians and wannabe recording stars about. Few people got to hear their own voice on record therefore fewer demos etcand there was almost a mysticism about being famous and performing. There were lots of labels and the standard was pretty high because of the competition with each other.
That all changed with Karaoke and cheap digital recording equipment and reality TV shows. It meant that all of a sudden everyone could instantly be a performer and record records. Soon everybody wanted to write songs and be a star. The sad thing is that most do not have the talent or have learned to play and perform properly. All of a sudden there was a flood of mediocre acts singing mediocre songs trying to flood the market. This might explain why the bar has been lowered IMO and why there are so many trying for so few places.
All the small indie record labels had been bought out and there is now a virtual monopoly which stifles the broad scope that the indies made. As you say they want to make the most money and therefore will only promote a few records but will spend lots on that few to guarantee success.
It is like going to a large supermarket now. There is no locally produced stuff of quality. Everything is pre packed and complies with the regs as stated by the chain with no individuality allowed. We have to buy the brand names they sell. If it is not on the planogram that every other store has it cannot be bought. Whilst the stuff is OK it is not the best quality and not perhaps in the quantity we want to buy it.