Their job has always been providing distribution. It's a difficult and tricky job, which is why they get so much more per unit sale than the musicians who created the music. The Internet, for the first time, presents a very credible threat to their distribution channel. Not yet, and not for quite a while, but it's coming. They can see it, and they're scared.
Musicians see it too.
Small runs of professionally produced CDs are available for a wholesale cost of about three bucks each. When a musician sells one for fifteen dollars all the profit goes directly into his pocket. Sign up with a major label, sell 100,000 copies, and you are a horrible flop. Make your own CD, sell a few thousand copies on your own, and you've made some serious money. Right now the only musicians making much money from Internet distribution are those who already achieved fame under the wing of the recording industry.