Bob (not me) sums it up nicely

Why Are CD Sales Tanking?
by Bob Lefsetz

1. The iPod
After you've got an iPod, why do you need a CD?
CDs are voluminous, not only in size, but content. They take up too much space with too much music you don't want to hear. Better off to cherry-pick, just put what you WANT to hear on an iPod. Which holds the equivalent of more CD booklets than you can pack in a suitcase.

As for the sound...

Sure, CDs sound better than MP3s, but CDs sound like shit compared to vinyl. They're cold, they're brittle... Better to hear a facsimile rather than the tinny, compressed, real thing.

2. Radio

The problem facing the sellers of recorded music is more one of EXPOSURE than theft.
Where do you hear the new music? Terrestrial radio may be the dominant format, but it has burned the trust it had with the listener. Everybody now knows radio is about commercials. People used to think the spots were an intrusion, now they think the MUSIC is an intrusion. The deejays are jive, what they play doesn't touch them, people are DONE!

3. MTV

Music video... A format that exploded and then died. Last time I checked, you HEARD music, you didn't SEE it. So there's nowhere to go with music video. Whereas with movies and television shows you can execute endless plots. In music video you can have the bitches and the ho's and the cash. You can have pretty people. You can have special effects. But you've got no soul.

Music video is dead. Except as evidence of what an act looks like.

But that's not enough to sustain a video channel, just ask MTV. Better yet, VH1.
Music video especially in the eighties, and even up through much of the nineties, was a train-wreck that demanded attention. It was a way to break acts. But the public has moved on.

4. People Don't Know What To Buy

Despite the rags and blogs, music is just not a general topic of conversation amongst the public now. Oh sure, young 'uns are still music passionate. But too often the music is just the grease, what you dance to, make love to. As for the oldsters, they're positively lost. They want to buy, but they don't know WHAT to buy.

You used to trust the deejay.

For a minute there you trusted Starbucks.

Until there's a trusted outlet with some mass and momentum, music sales will remain in the dumper. Rather than wine and dine programmers, labels should develop and support new gatekeepers. Who tell people what to buy!

5. Price

CDs are perceived as a rip-off.

Don't tell me how long you practiced, about your talent, the actual recording costs... When you can buy a DVD of a hit movie for a few dollars more than the CD, sometimes for even the same price, record companies appear to be ripping you off.

6. Lack Of Hit Acts

Most of the country thinks white gone black Justin Timberlake is a joke, not that they have to pay attention, in today's world you can AVOID everything you don't like.
A hit act is one that demands attention, that you want to focus on. There aren't enough of these. And those that are around don't live up to the hype.

7. Availability

There are fewer stores selling fewer CDs. This is a recipe for more sales?

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Nail, head, hit

Nothing that insightful in his reasons nor reasoning, but well summed up IMO.

For his solutions and conclusion check the full article - some of his points are debatable and its very US centric

Meanwhile in the real world those whom have the power to enact change continue to hide under their desks, praying they last til their next bonus payment... perhaps.

I haven't brought any music this week, or this month, but I have downloaded about 7 DJ sets and about 5 tracks for free.... one of which I would buy if I could find it in a shop here.

Once upon a time I would have brought at least 2 mix CDs a month on average and some months it would have been at least one a week - and this doesn't even count the free ones I used to get, most of which I would have paid for quite happily, my job of the time meant I got an obscene amount of music for free as part of my work.

The digital revolution... is all about you and how you choose to get your files...