Are there people living middle class lives in the music industry? Sure. Probably more today than ever before, and streaming (and possibly piracy) has a lot to do with that. Musicians don't make money from album sales, they make money from live shows. The middle class musician tours constantly because that's their full time job. It's not a 9-5, and you're not home with your family at night. I'm absolutely positive that this is the reason more people don't live middle class musician lifestyles.
Vanished? Nah. Never existed, at least not in any significant way. It's only now due to the Internet that small time niche musicians can make any money and get any sales without major labels. And major labels aren't in the business of making middle class musicians, as Jaron Lanier pointed out.
I'm also going to detour to your source... Jaron Lanier is famous for writing the story "Piracy is your friend", and a few years later writing "Pay me for my content". I would take Jaron Lanier's music industry opinions with a grain of salt.
> Since 2000, the number of full-time songwriters in Nashville has fallen by 80 percent, according to the Nashville Songwriters Association International
https://www.tennessean.com/story/entertainment/music/2015/01...
> According to the Bureau of Labor Statistics, there were 39,260 people in the United States classified as “Musicians and Singers.” This is down 27% from 53,940 in 2002.
https://www.digitalmusicnews.com/2015/07/16/if-you-think-pir...
> At the same time, consumers spent less money on recorded music (both physically and digitally distributed) than they had in the 1990s.[13] Total "music-business" revenues in the U.S. dropped by half, from a high of $14.6 billion in 1999 to $6.3 billion in 2009, according to Forrester Research.[14]
https://en.wikipedia.org/wiki/Music_industry
> For many musicians, the income derived from sound recordings is a small part of their overall revenue pie, and it’s decreasing. In aggregate, 88% of survey respondents derived between 0% and 10% of their music-related income from sound recordings in the past 12 months. Respondents who identified themselves as composers and/or recording artists were making a bit more, as were rock and hip hop musicians, but even when examined through various lenses like role or genre, income from sound recordings hovered under 15% of music-related income. Though differences exist by role and/or genre, the survey data suggests that income from sound recordings is a modest slice of most musicians’ income pies – a sentiment also expressed by a number of interviewees.
http://money.futureofmusic.org/sound-recording-income/9/
also relevant for the TV industry:
> According to the Writers Guild Association – West, screenwriters’ earnings were down nearly 25 percent in 2013 from 2009.
https://www.digitalmusicnews.com/2015/07/16/if-you-think-pir...
It's a net good for culture in the grand scheme of things. I'm hoping most professions eventually vanish along with musicians, including my own.
Film isn't there yet. A solo director can't produce a Marvel movie on their own. But it's becoming easier every day.