i don't think the tradeoff is still there. Winehouse and stone dont have big success by appropriating the latest black music (which still is hiphop i'm afraid), they use elder forms (motown,soul etc), because it's still anathema for white artists to blatantly use hiphop, only eminem and the beasties succeeded in that.
...And 3rd Bass, and Vanilla Ice (for a time), and Limp Bizkit, and Kid Rock, and Linkin Park... often whited up through distorted guitars, but that's sort of what the Clash did with reggae right? They didn't play straight up reggae, it was through a white filter. I think this still happens, but there's greater
awareness of cultural appropriation in the larger consumer audience (probably tied less to greater understanding of pop history than a recognition of how dire racial problems STILL are without the optimism of a generation or two ago).
the success of black artists in keeping hiphop black might have been a pyrrian victory. the pattern always was that when white artists appropriated black forms and made money, black artists ran away from the no longer cool form, and invented something new, often with the use of unexpected white influences (kraftwerk for example)
Is this the dynamic at play? "Coolness"? I think you need to look at larger social and economic changes in driving change within black music and culture. For instance, urbanization to the north of rural/southern r&b makes rock n roll, not chasing coolness away from where white people take jazz.
With hip hop, you have the end of formal segregation in the US, the resulting flight of the black bourgeoisie away from the ghettos, decline of manufacturing jobs, the progressive repealing of the welfare state, along with the incredibly explosion of consumer culture -- in other words, a new generation of black underclass responding to extremely difficult post-industrial conditions. From what I can see, these conditions haven't changed substantially in 20 years, except for getting worse in some ways.
Furthermore, a lot of innovation is the result of different kinds of black music talking to each other, not with white music. Hip hop a result of Caribbean sounds making their way to NYC, house borne out of disco and cheap technology, jungle drawing from hip hop and dancehall...
In hiphop, for the first time in history, it was mainly black artists making the money. They had no need to run to a new form, hiphop stayed cool for an unbelievable time span of more than twenty years. Now its innovative quality really is gone. In the meantime, white music necassarily became whiter than white (trance, indie), because using hiphop and other contemporary black musics was off limits. Just look at the outrage on this board about hadouken "abusing" grime, or at the incriminating of people like diplo, and you understand what i mean. (interestingly this outrage is often most violently voiced by white people). Don't get me wrong, i dont like how these things go, i only think this is how it came about there is no longer a real tradeoff between contemporary white and black music.
You're right, it is mostly black people making money, but the class dynamics within that still aren't well understood. A lot of the people making the most money are the businessmen/gatekeepers who are part of that first generation of black middle class to really make it out of the slums -- Puff Daddy, Russell Simmons, Jermaine Dupri. These guys aren't really artists (although some have made records I enjoy), but they exercise huge control over the direction of hip hop, and they've been successful far longer than most of the people making the music. I suspect that part of the anemia is not the lack of conversation between white and black music, but an increased corporate stewardship of black music (which always means less risk-taking), a kind of class collusion among white and black managers exploiting vulnerable artists (mostly TEENAGERS for chrissakes, who are cycled through after churning out a couple albums), and an entrenched studio system where salaried professionals make many of the beats ('cept for those expensive auteur beats from Timbaland/Neptunes/etc). Increased corporate control has also meant the end of sampling (which I always thought was one of the most radical sonic inventions of hip hop -- so cheap and so powerful), a huge impediment to musical creativity among a generation with little formal musical training.
I'm not sure, but it seems like you're implying that people who raise a fuss about appropriation (carry-over from the Mark-Simon thread) are part of the problem, that our moral "outrage" is part of what keeps these supposed barriers between black and white music. I think that's less the case than the increased segregation of white and black, not through formal policy (since segregation is technically illegal) but through neglect, through a widespread de facto ban on the black underclass from the symbolic order except in highly controlled ways (Hurricane Katrina being the perfect illustration -- news anchors at a total loss for how to deal with suddenly visible black poverty). I sense a great deal of
discomfort by whites in their reaction to black culture: whether it's distaste or ironized enjoyment, I rarely see genuine engagement except in "safe" older forms as you point out. You might blame this on people like me who raise a fuss over things like appropriation, but I think the guilt and anxiety is a product of crossing these invisible, internalized lines of segregation -- so much more difficult to transgress than clearly demarcated legal ones.