I don't want to discuss the morality and legality of file-sharing. I'd instead like to to stipulate that regardless of the rightness or wrongness of it, it's not going to go away.
Having said that, I really just don't believe that it has had a significant impact on CDsales. Sure, I bet purchases by college kids has dropped off somewhat. On the other hand, back in the dark ages when I was in college, we all spent hours copying each others CDs onto cassette. Back before George Bush raised the federal beer tax, 16 bucks got you almost all the way to a half keg, and you know where our priorities were.
But for older fogies like me who might engage in a bit of music downloading (not that I'd ever do such a thing of course!), I really can't imagine that the time and effort to download and burn a quality full copy of a CD is worth it. If I were to engage in such activities, I might imagine that it would involve "trying it before you buy it," and if I liked something I'd get the CD and if I didn't I'd delete the files, or at the very least just not listen to them which is almost the same thing.
The thing is, it's obvious that the music industry's promotional organ has lost the thread. All the homogenization of and payola in the radio business means that there's little chance of hearing any kind of variety new music unless you seek it out. Now, this has been a standard complaint for a long time but it seems to only get worse. The industry focuses on trying to get a mega-hit, a strategy which surely sacrifices long term revenue streams. Of course I have no way of knowing this, not being privvy to their numbers, but it's doubtful that anyone will be actually buying Britney's or [insert latest pop phenomenon]'s CD 5 years from now. Bands which manage to build up a dedicated fan base will continue to sell their old stuff and have a built in bunch of fanboys (and girls) ready to purchase their latest without need for an expensive marketing campaign.
Creating "the latest sensation" is surely the way to get promoted, but it hardly seems to be the way to keep the money flowing into your company year after year.
