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Me, I would have loved to see the term be stuck with a way of promoting music with no help from the majors, but as you can see, it was never going to happen 100 percent of the time. I hope the following can help lead to some understanding of "Indie" as a genre term...

Correct me if I'm wrong here, but I think that the whole connection with Indie to any kind of sound can be traced to the Indie-Pop C-86 generation which tried to jangle it's way into your heart, following the trail of the Smiths, although only very few succeeded even at the slightest. From what I remember, this may have been the first "Indie-anything" movement and even then there was some very slight confusion after a short while as the Pre-cool Primal Scream were on Elevation, which was a Creation wing that connected itself to Warners for a very short while, but most of it was pretty removed from the majors. Some of it tried to follow the footsteps of The Smiths, others not so successfully trying to re-create American Garage Punk (more like a Garage Folk sound as if someone just bought a 13'th Floor Elevators album and took it from there), but there were some good sounds here and there, although you had to have the time and money (especially if you were living on Imports) to choose for yourself.

Next, of course, were the Class of '91/'92 class of bands that really was one of the first major cases of confusion as the term Indie was really just a fancy way of saying Alternative. Although there was a sound, there was clearly nothing purely Indie about bands such as The Senseless Things (Epic) and possibly best known a band called Blur who were hooked to a once-pure Indie called Food (it kind of was until it hooked up to Parlophone/EMI). This generation was to me the start of the confusion, with some UK Indies that continued a tradition of dealing with the majors but at a far more intense level (Creation was pretty much that scene's Mute in my opinion - MBV and Primals to Sire, Adorable to SBK - all before Oasis to Sony) or sometimes just going for the brass ring and usually only getting 10 Minutes of fame at least.

The Early 90's also saw a rise in Major Indie wings that hardly fooled anyone unless they got one of the few class bands, trying to follow up on the interest of Grunge or then-small cult of British music followers in The States, but fall flat on it's face most of the time. Most Rock and Pop sounds that were different from what was accepted by the US AOR/Top 40 stations was at first branded College Rock, but then had the Indie brand on it to help sell the music better for a "cooler" sounding name.

I usually put the opinion based on The Late 80's and Early 90's Music Business as to why there's a confusion, leading to the recent mix ups with both the public, usually helped by the media's use of the term, and the promotion of the music as to what is Indie. Of course, this led to the over-use of the term for all kinds of music with an "Alternative" edge to help sell it quicker - Irritating, but in an age of generalizations, not that bad of a thing if it helps get some musicians better known.