Looking at the big picture, if anything, file-sharing has actually kept the music industry afloat as this is the ONLY way that most people are finding music worth buying these days.
FM radio has become a wasteland of limited playlists handpicked by consultants and focus groups to appeal to the lowest common denominator (so as to drive ratings and ad revenues). This is why the "hits" have a much longer shelf life than before. Radio programmers are so afraid to play something new and different because they are afraid their listeners will tune elsewhere. Hence you have bland songs like "100 Years" by Five for Fighting and the same old songs by Maroon 5 and Coldplay still in heavy rotation 2-3 years after their initial release!
"Play it Safe" is the motto of radio programmers today, leaving it to satellite radio (with their 100+ commercial free stations) to break new songs and artists. But since satellite radio has only penetrated a fraction of the total audience, it is not enough to stop the decline of the music industry.
It used to be that record labels would invest several years in developing new artists, tolerating low sales for the first few albums in exchange for a big payoff later on when the artist finally achieved critical mass. But in todays climate, the record labels would have given up on such artists as Bruce Springsteen, Pink Floyd, REO Speedwagon, The Police, and Bob Dylan (just to name a tiny few bands that didn't sell many of their first records but now sell millions of records a year through their catalog years after their popularity peaked).
It is hard to believe that the "flavor-of-the-month" recording artists record labels are thrusting upon us now will be selling much catalog years from now. Justin Timberlake, Britney Spears, Clay Aiken, etc. Can anybody imagine people buying their "music" a few years from now?
Online sales had the potential to offset declining CD sales years ago but the music industry decided to hobble this growing market by imposing upon us DRM (Digital RESTRICTIONS Management).
iTunes could be selling TEN TIMES the amount of music they are today had they not been forced to impose digital restrictions management on their music. The vast majority of consumers simply will pay good money for crippled music files when they could easily rip a higher-quality track (with no restrictions) from a CD - either traded on line, bought used or borrowed from a friend or even the library.
It will be very interesting to see how the DRM-free music about to be offered by iTunes (EMI only) fares. I have some issues with the higher price of these DRM-free tracks but my gut feeling is that the music industry will be surprised by how briskly these tracks sell.
You post is all that one would need to see what is happening. There are still a few bands that are bucking all these trends. Wilco comes to mind. It is nothing but product now days. Sell and move one.
With Wilco:
They finish an Album (Yankee Foxtrot Hotel) and deliver it to Reprise Records (Time Warner)
Reprise says it sucks and wants massive changes,
Wilco says no.
Reprise dumps them.
Wilco buys back the Album and shops it.
Nonesuch, (another Time Warner company) buys it for even more money that Reprise could have.
The Album is a huge hit and Critics even love it.
The Short term profit model has infected the world of music and has destroyed it. They can now cry like a baby all they want. They killed the industry.
Music is just another form of media to buy. It is not important to people anymore. No Artists are singing for the current generation. It is all fast food.