Excellent response.

Art of any kind will never work within the framework of an economy
Disagree. Your motivations for creating art can be pure, and then you can employ your business acumen to market it and sell it. It doesn't follow that you are making art for money.

To know requires you to be connected intimately with your community. It means you have to listen to what people say and how they react to your expression.
It is extremely difficult and impractical to do this. One of the best ways to connect with your community is to reach them through established channels (clubs, radio) and modes of distribution (record & mp3 releases).l

Your points on exploitation and having "character" are spot on.