The first sign that things have gone wrong – the goodie bag. For years, registrants at South by Southwest would be given a bag with art done by a musician – Jon Langford, Wayne Coyne, Thurston Moore (I think), and so on – filled with magazines, CDs by bands and countries that want attention, flyers, gum, condoms and hangover remedies, all branded by different music-related companies. This year’s bag didn’t have celebrity art and it contained a pocket guide to performances, the full program (which is a year-long resource), and the last two weeks of the Austin Chronicle. That’s it. The row of magazine racks that previously held alt-weeklies from around the country was virtually empty with the exception of a stack of OffBeats.

Similarly, the trade show was once a hub of activity, but the Internet has made trade shows as we know them largely obsolete, which combined with the state of the music industry translates to a sad trade show. Usually, I’d grab CD samplers from other countries looking for music that I’d never hear otherwise, but I didn’t see many yesterday, although at some point in the next few days, I’ll find out what the music of the Netherlands sounds like. To keep the cactus and tumbleweeds from blowing through the trade show, SXSW has kept the interactive trade show up from the weekend before filling out the room with people in businesses that don’t have the stink of death on them.

And yet …

As gory as these scenes are, there was more music going on Wednesday and more people looking to hear it than ever. I tried to see a Generationals set at an afternoon party at 3:30, but the venue was full and there were 30 or so people in line outside waiting to get in. On Austin’s 6th Street, bars with parties were easily identified by the lines at their doors stretching out into the middle of the streets. Shut out, I went to the Canada Blast party, and it had a good crowd for More or Les (indie hip-hop that sounds more or less like indie hip-hop) and Diamond Rings (pretty good throwback to early electropop), neither of which had any appreciable buzz I was aware of.

And it’s not just indie kids. SXSW started with a heavy emphasis on roots rock, there’s enough roots rock programming still that those who want to can fill their dance card with nothing but country, rockabilly, folk, garage and their permutations. At the Conqueroo party in the afternoon, the venue was full (though a line wasn’t a problem) and touches of gray were more common. That didn’t stop people from crowding around the Hobart Brothers and Lil’ Sis Hobart – Jon Dee Graham, Freedy Johnston and Susan Cowsill – like they were twentysomething phenoms for their set.

The one thing SXSW reminds me each year is that there’s more good music in the world than ever before and more people who want it passionately than ever before. What people are trying to figure out is how to get paid for it.