Is anyone surprised that fewer people than ever think of themselves as pro musicians? You shouldn't be. The club infrastructure in the US (where musicians perfect their chops and traditionally are able to make a living in the "farm team" before becoming a recording artist) has been completely gutted. Once upon a time you could find a place to play almost every night of the week, regardless of where how good you were. Now that doesn't even happen for many hit artists with multiple hits under their belt.
And that's a big reason why the state of music is what it is today. Yes, we've had huge technological changes in music that have made a big impact on the state of music, but one key element of music that can never be replaced for a musician is a gig. You can't develop your craft unless you perform in front of people - a lot. You've got to get in your 10,000 hours, as Malcolm Gladwell states in his best-selling book Outliers: The Story of Success. Why do you think The Beatles were so great? Play 6 sets a night for a couple of months and just see where your chops are.
Unfortunately, there seems to be no immediate answer to the lack of gigs. Just don't expect anything new in music until things turn around.
Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.