They weren’t making money with that model, which was more like “visual radio” than television. You want to make more people sit and watch TV to justify your ad rates, then you’ve got to make a compelling program that more people (with money) want to watch on a regular basis, and preferably, make a cheap program.
I think the last band that shocked everybody with the speed of how widely popular they became from word of mouth was Nirvana. That was 20 years ago. I’m not sure that will happen again. For a network like MTV to be viable, they would need a Nirvana in each genre that people would be willing to sit down in front of the tube and watch. Bands that get that big don’t last that long. They’d need 10 Nirvanas or Biebers just about ever year to make the money they make now.
A hit reality show that “tells a story” each week makes back multiple times more money than it costs to produce and is a consistent form of programming with a wider range of viewers than any musician would garner, which makes advertisers more comfortable and more willing to pay the rates MTV sets.
Wait, I got it! Prince does a reality show every week at his big purple mansion outside Minneapolis with Wendy, Lisa, that guy who dressed like a surgeon, different light-skinned, half-naked chicks as love interests and cameos by Morris Day! Then he sings one of his old hits at First Avenue at the end of every episode! Who doesn’t like at least one song by Prince? It’s money, I’m tellin’ ya’!!