As much as I think folks are making good points about the economy and a loss of interest in the music, I think that Bob has touched on another very important point. I remember being in my late teens and early twenties and having a lot less choices when it came to what shows I would see. Nowadays, it seems like everybody and their mother is touring in hopes of winning back some of that cash that they no longer see from album sales (which wasn't much to begin with). Because I live on a fixed income and I make a point of saving up money throughout each year to enjoy myself at ProgPower, I tend to limit myself to seeing one show in my area each month. Whereas I may have had two shows to choose from at the most in a given month ten years ago, I now have months when I'm struggling to decide between five or six shows. In the Chicago area, the month of September alone is making me choose between Kamelot, Joe Satriani, Saxon, Steve Hackett, the Melodic Rock Fest, and Helloween. Thankfully, my band is opening for Helloween, so that takes care of that show. However, when one is a fan of all of these acts, how does one decide which show or shows to choose?
This brings me to another point. I believe that metalheads in general are more open-minded in this day and age. Of course, I don't include myself in that group (I will never get down with the growlies), but there are a lot of kids out there these days who don't distinguish between the more melodic metal and the more extreme stuff. To them, it's all metal, and it's all good. Unfortunately, these younger folks have even less money to spend on shows than I do. The over-saturation of the market is going to hurt a lot of bands, whether they're just starting out or well-established.
One reason why I think this over-saturation occurs now more than ever (besides the ever-growing presence of the internet) is because heavy metal is one of the only genres of music wherein a great percentage of its fans are musicians themselves. So many people who grow up listening to their favorite metal bands think to themselves, "Wow! What these bands are doing is awesome! I want to try that!" By contrast, you don't often see a bunch of bros listening to Jack Johnson and saying to each other, "Let's do this!" The interesting thing is that a lot of these metal fans turn out to be pretty good at making this music as well. Just look around on this forum and see how many of us are in bands, and good ones at that. Sadly, we're all fighting for the same audience, and what's even sadder is that most of that audience is only made up of us.
By no means do I feel that I know all the answers. If there's anything upon which I think we can all agree, it's that there are a bunch of factors playing into this problem.
Stay metal. Never rust.
Albert