The advancements in technology to allow musicians to make quality recordings themselves are great! I remember back when there was no hope of putting quality music onto media without either being signed by a record label or knowing someone who owned a studio.
With this technology being affordable, combined with the internet, the big traditional ‘record companies’ are nearly irrelevant.
It is true that just about anyone can put together a reasonably good studio on their own, but this hasn't made them irrelevant. It is a step down that road, to be sure, but we haven't arrived yet. Record labels are still relevant because of the domination they have over channels of distribution.
Yes, the internet circumvents this by allowing artists to go straight to the audience, but there is a catch: most people are not sufficiently adventurous to go looking for new music. They listen to whatever is the rage. Whoever has their name plastered all over the magazines and such. The marketing machine that the old school labels still have is worth a great deal to new artists.
IMHO, the biggest thing right now in terms of redefining distribution is not the internet in general, but iTunes (which, incidentally, I do not use) in particular because iTunes sells the big names and the indies on the same digital shelf. Ultimately, Apple cares precious little what kind of music you buy--as long as you pay the iTunes toll to get it.