Live streaming content has huge potential but the justin.tv brand is pretty tarnished at this point, I can't see many big brands/name choosing to broadcast there. They would need a complete relaunch and name change I think.
With the experiment of streaming Steve Aoki on twitch it wouldn't surprise me if they launched a dedicated branded site for live music at some point. Google may want to keep that stuff on youtube though.
It just had a increasingly unprofessional/low quality image that in addition to the many pirated tv streams as other people have mentioned, attracted many teenage girls with low quality cameras and viewers asking them to 'show feet' and other demands. This quote from this fast company article sums it up pretty well:
"By last summer, its once-thriving community had dwindled to a ghost town populated by puppy cams, eccentrics--like the stoner who filmed himself taking bong hits--and a few lonely lifecasters. Mostly young women, they tend to sit, static, in front of a webcam, rambling about their interior lives to a tiny audience of leering commenters."
With the experiment of streaming Steve Aoki on twitch it wouldn't surprise me if they launched a dedicated branded site for live music at some point. Google may want to keep that stuff on youtube though.