There was a writeup here before this one. The node title says all you need to know about it. The following is my response to it:
Record companies, like in any other major business, are first and foremost concerned about making money. This is not to say that they care only about making money, or that they don't care about the kind of music they produce; however, music is expensive,* and in general record companies do what is necessary in order to stay afloat -- and, typically, this means producing mediocre music that will make money rather than new and interesting music that might.
While some will argue that profits from a wildly sucessful band can offset the losses from another less successful act, a record company will not willingly sign a band that it knows will be unprofitable. Furthermore, when a record company has the choice between signing a band that may become the next Radiohead and a band that will probably become the next *N SYNC, they'll choose the boy band because the boy band is guaranteed to make money.**
As a result, artists that are a financial risk***, won't get signed by major record labels. Of course, this isn't the worst thing in the world, and this doesn't mean that new, unusual, or exotic musicians have nowhere to go: There are hundreds of independent record labels that exist to produce music that doesn't make it to the mainstream, and through an indie label, any talented band can find a way to publish and distribute its music. However, what an indie publisher doesn't provide, and can never provide, is widespread exposure.
It costs many, many thousands of dollars to have a song added to commercial radio station playlists****, and while the major record labels can afford to place their artists on the airwaves across the country, smaller labels don't have the resources to give their bands the same. Thus, artists that sign with independent labels -- no matter how talented and promising they are -- don't ever get the chance to reach a nationwide audience or reap large profits from their recordings. At the very best, they'll sell enough records to break even or make a modest profit, while the most lucrative concert and album deals go to other bands -- bands that provide a market tested, reliably profitable sound.*****
In this way, the constant presence of boy/girl/other bands is not a good thing for small, non-mainstream musical acts (or "real musicians", or whatever you want to call them). In an increasingly profit driven industry, innovation and novelty are not as desirable as consistency and predictability -- which means that artists who branch out into risky, exciting musical directions get punished for doing so.
* And it is getting more expensive. Go read zophos's piece on Clear Channel Communications to find out why.
** And bands that once made money but don't anymore get dumped. This is one of the reasons that The Smashing Pumpkins aren't around anymore.
*** And by that, I'm talking about artists who, because of their unusual/exceptional talent or taste create music that doesn't fit into mainstream popular music. The music they create may be fresh and new, edgy and experimental, or simply not classifiable.
**** Yes, it does. Even though payola is technically illegal, pay-for-play has been alive and well for years by virtue of a simple loophole. Go to salon.com and read Eric Boehlerts fine articles on Clear Channel and the music industry for more details.
***** Yes, there are exceptions -- but on the whole they are rare. For every band like Radiohead, there are dozens just as passionate and talented that never have major success.