Congress could step in and devise some formula for compulsory licensing that seems both fair to the copyright holder and users, but that seems unlikely--whereas the labels are few in number, organized, highly motivated, well-funded and familiar w/ the political process, music consumers (as a group) are just the opposite.

Maybe artists can play a role in pressuring the labels. You mention that labels are effectively paid twice under the current system (although, presumably, taking equity in a company also comes with financial risks). Thus, if popular artists feel that they're getting screwed under the current system, perhaps they could exert pressure on the labels to alter their (the labels') behavior. Once the popular artists are mobilized, it wouldn't be difficult to get non-mainstream or relatively unknown musicians on board--indeed, these are the artists who, as you mention, suffer the most under current conditions and would greatly by having their music more easily accessible.

Finally, maybe innovation in distribution is the only way to force the labels to act reasonably. Perhaps the labels will get tired of playing a constant game of cat and mouse, with consumers developing "illegal" distribution systems and the labels scrambling to restrict access. If consumers can consistently innovate around access restrictions faster than labels can build/maintain them, labels may eventually have to accept reality and accommodate consumers' demands.

-- MatthewLadner - 27 Oct 2011