From my perspective (having played in local acts), the decline of the local musician career more points to a larger combination of converging trends:
- Increasing technology (eg: there is much less need for certain careers. An example is the local mid-grade demo studio; these have largely closed with computers able to easily exceed the old demo studio's quality)
- Corporate homogenization. In the 1990s, radio stations merged and became more national. This resulted in stations paying less attention to local markets. The same can be said for record labels. The same can be said for local music venues,
which in some places are also in decline. (https://www.theguardian.com/cities/2015/sep/09/the-slow-deat...) Ergo: there is less room for "regional hits" and regional music scenes.
- A huge increase in entertainment choice, lowering overall demand.
- Various entertainment trends that hurt certain types of musicians more than others (eg: In pop, today there is much less of a focus on band-oriented music, replaced with DJ/electronic type music)
None of this had much to do with IP. In fact, streaming / Napster / etc. may actually help some local musicians a touch (particularly in more niche genres), by allowing musicians to gain exposure in a way that is outside the standard corporate music environment (replacing the old tape trading circles of before).
Of course, exposure alone doesn't pay the bills. And there's certainly a case that streaming / Napster / etc. hurt the income of established musicians that relied heavily on album sales for their paychecks. But to me, it's strange when local musicians focus on only that (and yes I have heard the same from some). That route of income didn't really apply even in pre-Internet times, until you got "signed". (And if you weren't biz savvy, you could easily get screwed by that route too, see Albini's famous rant -- http://thebaffler.com/salvos/the-problem-with-music )