This is exactly what the big labels fear, and why they have the RIAA out suing anything that moves and is wearing headphones:

Music-streaming service Last.fm is now paying unsigned artists royalties for every song played on its service. Since the company announced the program last January, 70,000 artists and small music labels have signed up for it and uploaded 450,000 tracks.

If the artists can go straight to distribution without a middle man, what exactly are the labels there for? It's a good question, and it's why they are so utterly terrified. They could have set up this kind of system themselves, but - like many old businesses - are utterly stuck on an old business model and cannot "move on".