Rubin may be exaggerating with that last prediction, but there is no doubt that the industry must find a new business model if it is to stave off disaster. For many, the subscription model, which treats music as a service, not a product, could be the last best hope. Rhapsody's Tim Quirk said Apple's 99-cent model represents the illusion of a solution, but because it still treats music as a product, it is not sustainable.

"iTunes is yesterday disguised as tomorrow," Quirk said. "For the past several years, it has given the record industry the false hope the transition from product to service can be staved off. The distinction between music you own and music you can listen to at any time is being erased."

Quirk said the subscription model dramatically increases the potential exposure for lesser-known, independent bands. Nearly 49 percent of the music sold at big retail chains like Wal-Mart consists of the top 100 bands in the world, Quirk said. In contrast, 23 percent of music played on Rhapsody is from the top 100 bands in the world.

In other words, more than two-thirds of the music that people listen to on Rhapsody is coming from independent, or lesser-known bands. This bodes well for the health of the industry, Quirk argues, because it means that young bands have access to vastly more consumers than ever before. Likewise, consumers have access to vastly more new music than ever before.

"The major labels had a business model which has been eviscerated and is now in free fall," said Bob Lefsetz, an expert on the record industry. Lefsetz is an entertainment lawyer and former record company executive who has been publishing The Lefsetz Letter, an industry newsletter, for more than 20 years. Lesfetz said it should come as no surprise that Radiohead declined to renew its contract with EMI, which ended with 2003's release of Hail to the Thief.

"The record companies are thugs," Lefsetz said. "It's like organized crime. In the old days, they used intimidation and bullying to control the means of distribution. They beat up D.J.'s and rappers in the back alleys of clubs, and never paid royalties accurately, or on time."

"They can't do that anymore," Lefsetz said.