Concert venues enforce genre, more strongly than the shelving of books or records has ever done. If you show up at the square dance and they're playing eighteenth-century pavanes, or Black Flag, there will be protest. If you show up at the county fair and they've booked a Korean classical ensemble, there will be mass confusion. If you go clubbing and find that they're playing the classic hits of Kansas, there will be blood.
Musical genres are centuries old, and because new music must necessarily be premiered at venues designed for old music, new musical forms have often been greeted with confusion or hostility. Audiences rioted at Stravinsky's Rite of Spring premiere, they were puzzled by most of Beethoven's symphonies, and you don't even want to ask what they threw at the punks and the New Wavers in the early days of punk and New Wave.
For all I know, recent changes in the recorded-music industry could actually strengthen genre boundaries in music, because as recordings get less and less profitable the revenues from live performance become more and more important, and having a definite genre might help when scoring live bookings. This is just a guess, though; I've never tried to run a live band.
Much of music is also intimately tied to the old art form of dancing and many other aspects of culture, such that very strong sets of expectations are placed on music in different contexts.
Actually, it's even more complicated than that. These sets of expectations are often somewhat disconnected from the mainstream population's everyday experience, have become somewhat shallow/cartoony, and are subject to media manipulation.
you don't even want to ask what they threw at the punks and the New Wavers in the early days of punk and New Wave...having a definite genre might help when scoring live bookings. This is just a guess, though; I've never tried to run a live band.
Having a live band is often fraught with dealing with expectations. It's to the point where someone can have something like an Irish Traditional or Bluegrass influenced band and run up against people constantly asking for music that you don't really want to do or really doesn't fit the aesthetic of your band.
Now, we've got the iTunes Store, iPods, individual song purchase and the 'death of the album' and while there is genre blurring, it seems to me that this has also been happening for a long time and there are plenty of strong musicians who play almost exclusively in their genres and succeed.
The music industry is not an exact analog to the publishing industry, I know, but it would seem they have enough similarities to be explored by someone like Mr. Stross, and extrapolated out to genre fiction.