Personally I believe that the problems faced by avant-garde film began a while ago, and I've come to suspect that these problems began during the 1980s. This quote is from a book called Privatizing Culture by Chin-tao Wu. It seems to sum up the problem, and explains how Hollywood films have managed to annex terms like "independent."
"commercial films are as much art as non-commercial ones.... We've got to bring the two together." (1983) said Frank Hodsoll, NEA chairman during the 1980s.
Interesting to consider since all too often the "experimental category" in festivals is just a euphemism for inept attempts at narrative cinema.