In my opinion, there were 3 big factors for why that era put out so much good stuff:

1. Record labels had margins: selling records actually made enough money to cover the cost of recording and then some if a band was even moderately successful. As a result, labels would invest serious amounts of money in marketing and managing a band. While bands grossed money from their live shows, the shows were meant to promote the album sales that really made money. After Napster, pirating, and later streaming took over, these margins disappeared even as the costs of recording plummeted. Now, the recording exists to promote the live show because album sales and streaming royalties are almost nothing.

2. Record labels took risks: because they had margins, they could afford to miss on a few bands to find a hit. Record labels at the time basically assumed that they really didn’t know what would sell. So, they took risks and gambles on experimental bands. Some of these bands flopped, but some of them really took off. By the 90’s, you had labels employing younger people who “knew what was cool” and passed on bands that didn’t fit a label’s “sound”. Labels developed identities for the bands they signed. In the 70’s and 80’s, that wasn’t so much the case as record labels throwing darts at the wall to see what would stick.

3. The barriers to entry for the music industry were crazy high. Due to the rudimentary technology, quality recording was expensive. You had to save up tons of money to get studio time as an unsigned band. You also had to be a really talented player, especially a drummer, to record a record. So many bands had to fire their drummer in the studio because they couldn’t keep well-enough time. Today, anyone can release a record, and there’s so much being released that it’s almost impossible to find undiscovered stuff you like. There’s simply too much information to process. Back then, the great cost filter whittled the field down into a number of artists that was much more manageable and kept quality more consistent. Eventually, this began sacrificing innovation as labels became more calcified, but early on there was a great balance between experimenting and filtering out the unready.