Here's what I think it is, opinion informed by observations of my two teenage daughters. There is mainstream music, but it's so far removed stylistically from what you and I are used to that we scarcely recognize it as music and it's not the sort of thing you pick up in a cover band.
I just looked at the Billboard Hot 100 list. The songs on it right now are a combination of "hot country", hip-hop R&B, and Latin. Very little of what you'd normally think of as coverable live music, maybe except the Latin. This is music that was not conceived to be played live, nobody hears it and wonders how it would sound live like we did. Yes, the kids do go to the shows when these people tour, but from what I could tell from the pictures I saw there wasn't a band onstage at the Weeknd's show or Post Malone's show. People go to see the artists dance around and sing.
So - new popular music just doesn't feed the live music scene the way it did in for instance the 80s when I started playing. Which leaves us to play a lot of that same music we've been playing all along for audiences of increasing age and decreasing size.
We're old and live music is no longer as interesting to the demographic that mostly goes out at night.
I saw Halsey last summer with my teenaged daughter. It was Halsey (she actually played bass poorly for part of one song), one guitar player, and a drummer. Most of the music was entirely tracks. It sounded good but it wasn’t something a cover band would want to do.