As is the case in New Orleans (and in Spain re: Flamenco), the local music has become quite commercialised, to sniff out some real authenticity you will need to look very hard. I managed to hear some truly great music, drummers playing the absolute funkiest of stuff, but they all seems to be selling the same CD of a "generic" band playing Guantanamera with their own name on the cover. Very sad. I did manage to video some of the music I heard though, take a video or a recorder but if you do record them ask permission and tip them.Can I find New Orleans music making style somewhere here? Do Peruvians second line? Is there a brick and mortar place in Peru that is devoted to music of the ancient cultures? Are there people similar to gypsies in Spain who make music?
If you take your sopranino, you'll probably find it easier to talk to and make friends with the musicians, but it's very worth while learning some of the language before you go. And Quecha is likely to be more useful than Spanish in many regions.
I spent some time in Cuzco and wandering around the Andes. Cuzco is a fine place to start (it was the Incas' capital) and I found a really nice quena (flute) there, and a tiny workshop where they are made. Avoid the tourist shop and market place percussion and flutes. If you are going to Cuzco I'll try to dig out the address of the workshop, it was a tiny little place in the backstreets.