He's being more than a little provocative. He's just picking up on current trends and extrapolating them to an illogical extreme. He hasn't factored in the demand for live music, for a start. He's presumed that there is no demand and the current trends will just continue to the point of collapse.
If anything the music industry is being reclaimed by musicians through the use of ever cheaper recording technology. The record companies and distributors no longer guard access to the music purchasing public! There will still be a demand for recorded music and people will still want to see the artists live too. There will be more artists to choose from if anything - good, bad and a bit crap. But thanks to the internet, word of mouth will increasingly become be the way of marketing. Take Sharay Reed for example - a couple of youtube clips and people are picking up on his playing.