I think something utterly unique needs to have been created for him. Certainly lifetime achievement. Certainly a generational acknowledgement. Grammies galore. His work is mostly connected with music. Perhaps the Nobel committee could have created a new niche for him, one that takes into account a lifetime of zeitgeist-watching. If not zeitgeist-molding. I like your idea of the musical bard.
When I think of a book which won the Nobel prize for Literature, I think, "Ah! Here must be a superior, outstanding level of writing." The book would be a must-read, and I wouldn't need musical accompaniment to read it. This is my main contention for it falling into the "Literature" category. Does the work stand without music.
In the same breath that I say this, I acknowledge that he has been an enormous influence. But the quality of it is so different than can be fetched through the reading. Literature - reading - literature - reading - literature - reading.
As I said, perhaps the Nobel committee could have created something special and unique for him. He surely deserves it. Too late now, though. As I understand it, done is done.
It's just my opinion. I gather you and M see it differently, and I'm cool with that. Many agree with you.