Tell that to
Justin Bieber. He sang for free and got a multi-million dollar contract.
How is a process "broken" if it works?
There are others are well.
Journey found their lead singer Arnel Pineda through YouTube. He was on his own, forced to make his own way after his mother died and his father was bankrupted paying her medical bills. Journey saw his copyright-violating videos and realized how well he could sing. Now Pineda will never have to worry about paying medical bills again. (See his story
here.)
Here's some more:
15 Aspiring Musicians Who Found Fame Through YouTube
These are real, flesh-and-blood people whose lives have been made better. Look in their faces and declare that they'd be better off without YouTube. It's simply not true.
BTW, there have been musicians playing for free in order to get exposure for a heck of a long time. This didn't start with YouTube. Here's a few examples:
10 Musicians Who Got Their Start Playing in the Streets
YouTube simply enables those people to reach a LOT bigger audience... as in world-wide.
In other words, YouTube took what was already happening - musicians playing free for exposure - and made it a lot more effective. That's supposed to be a bad thing?