When you refer to "free music made by amateurs" (on TheHilariousTragedy) it's not clear whether you mean original music composed and/or played by amateurs for the love of it (remember the etymology of the word "amateur"!) or music "made" simply by digitally copying / manipulating professionally-produced recordings. There has always been a thriving amateur music "community" and culture, but, certainly in the field of classical music, the greater expertise and dedication of the professional composer / musician makes his or her offerings more rewarding for the listener.
Confusingly, I guess I mean a bit of both. Mainly the first, ie. people who make things for the love of it. (But also including, as with EricRaymond's analysis of hacker culture, those who expect some reward in terms of social status, but not mediated through the traditional mechanism of recording and having an exclusive right to selling reproductions.)
However, I do also think that there's a FreeAsInSpeech element as well. Music always develops by feeding off, and adapting from earlier examples. Sampling and turntablism are obvious examples. But quoting melodies, reusing rhythms and imitating styles of arrangement are also common in both classical and popular traditions. There's more discussion on the FreeMusic and NetworksAndMusicalEcology pages. But relevant to the issue of the hilarious tragedy, I think that allowing and encouraging reuse is the key to the amateur world becoming better than the proprietory one.
If amateurs make music for love, but otherwise act in the same way as professionals, and deny re-use and sharing of musical creations, then the amateur sector would probably remain a minor backwater. But if it takes advantage of it's amateur status to also encourage freedom of reuse, then it can thrive.
What difference might this make in the classical world? Well, one problem many school and amateur orchestras have is getting hold of expensive sheet music to practice and learn from. Amateur composers would make scores available free, and orchestras would be able to print as many as necessary. Orchestras would get a wider repertoire drawn from the amateur sector, practice more styles and have more chance of working with trained composers. Amateur composers would hear their work performed more often and learn more from musicians.
See also FreeMusic