This argument comes around cyclically, as improvements in the tech advances. Orchestras get whittled down in size and are replaced by new advances in digital music. Of course purists and the musician's union go bonkers. This article focuses on the software Notion, that allows digital versions of music to be played on a computer.
Is tech killing live performance? In a way it can be argued that it is. But no more so than the insanely rising costs of producing live performance. The two go hand in hand, and it is an ugly and confusing mess to sort out.
What's the worse demon? A show that can no longer be considered producible because of high costs disappearing from the repertories of theatres? Or, those shows being presented with digital musicians?
To tell you the truth, I am not sure. In our recent, very successful run of Buddy, The Buddy Holly Story at Wayside Theatre, which closes today after a mostly sold out run, I can't tell you the number of times we had to explain that all of the music on stage was being played live. And this is in a teeny tiny theatre where you are right on top of the performers.
If that expectation has been shattered for the audience, and requires explaining, then the questions may already be moot.