1 Random artist finds inspiration and writes a song
2 Artist decides his song is so good that he/she records it in a professional studio (which he can rent) so the sound quality is superb
3 Artists logs into the iTMS and publishes his song
4 Artists gets $ from every song sold and the iTMS charges the artist for the distribution
See, that's the catch-22 for new artists. The labels are the ones that get tunes played on the radio. In the 50's and 60's they would strong-arm their stuff in, but I'm sure even nowadays they provide incentives (read: bribes) to get new stuff on the air. Especially if they think the band is really good and will make it in the long run. And don't fool yourself into thinking a new band can get huge without radio.
The problem is that the labels get the artists by the balls when they sign them up to ridiculous contracts. Your 1-4 examples look pretty good on paper, but in order to sell any significant number of copies of their music, anyone wanting it (but doesn't know it yet) has to wade through tons of (what that persons sees as) crap just to get any exposure to something they'll consider good. I'm sure there's a lot of music in the indie catalog that I would just love, but I don't have the time to wade through it all to find it. Instead, I'll listen to the radio and when I hear something I like, I'll try to pay attention to who it is. I may or may not end up buying it, or checking out what else they do, but without radio exposure, most good indie bands don't have a chance in hell of selling to anyone except those that happen to be in the bar where they're playing one weekend.
Now, if you take a look at already established and popular bands, that's a different story. Someone mentioned huge bands like Pink Floyd. Their last couple of CDs didn't need a big label to sell. People were going to buy it if they like Floyd no matter what. And in a case of that kind of popularity, the radio stations were going to play them with or without a major label. The same could be applied to other huge (classic) rock bands, as well as established artists in other music styles (country, rap, R&B, blues, etc...). Another example would be someone like Eric Clapton. He could put one out on "Clapton Records" and would sell nearly, if not exactly, the same number of CDs as he will on a major label.
Unfortunately, the number of artists (of any type of music) that could dismiss the labels and still sell as many CDs and get the same radio exposure are limited. And any new band is going to go nowhere without radio (or MTV/VH1) exposure.
In the end, I don't see the labels going away totally any time soon. They're in cahoots with the big FM music stations and in general, they do a good job of promoting new good bands that sign up. It's just a shame that there's really nothing to keep them from raping the artists. If there were just some way for new bands to get exposure to the masses without having to sell their souls to the labels then things would be better. Unfortunately, the Internet can only go so far in helping a new band with this.