Try stopping into to some of those recording studios and having an in-depth conversation about how they're being impacted by online copyright infringement. I have, and while most accept it as a fact of life now, they will also explain how it is hurting their business and ability to make music professionally.
> giving away CDs at shows to keep people coming to the next show
No band in the world does this. They SELL CDs at shows, because it's one of the few ways they can generate enough cash flow to buy gas and food.
I guess it's possible, but extremely unlikely, that I am just so cool that they want to give me a free copy to share with people, but I have legitimately never paid for local band's music. By this I mean a band member or representative will give me CDs or Download links all the time. Usually I stop by the table to grab a couple band stickers or a tshirt, and they ask if I want a CD (usually I don't, my live music preferences are much different than my recorded preferences but I still want to encourage their performing). When I decline, they just hand me one anyway and say here take it anyway. If I point out that I wouldn't listen to it, I prefer this music live, they say "give it to a friend".
Basically my point is, they won't decline the money, but they still want their name out there bad enough to make the trade-off. Particularly when it's download coupons rather than CDs (which have an up-front cost). Similarly all the recoding studios in my town are booked up solid, and the better dozen or so sound engineers are never hurting for work. (And this is a pretty small town, 200K pop in the greater metro area).
> giving away CDs at shows to keep people coming to the next show
No band in the world does this. They SELL CDs at shows, because it's one of the few ways they can generate enough cash flow to buy gas and food.