Cool info graphic posted on good.is, depicting the music industry’s revenue source(s) from 1980-2010:

You can see where it starts, in 1980, where LPs account for almost 100% of music industry’s revenue.  In a thirty-year period, we see tape cassettes sweep through to take the spot as the industry’s cash-cow and we se it happen again, with CDs.  However, in the last decade, music sales are not only down, but scattered amongst many different mediums.

What this shows me is that the record industry, through the 90’s, mistakenly thought that is was selling a physical commodity, like clothes or cars.  However, with art and entertainment, when consumers buy a physical object, like an LP, CD or DVD, they aren’t buying it for the object - they’re buying it for it’s content.  In other words, you don’t buy a CD because you want a plastic discus.  You buy a CD because you want the music that’s on it.

For the first seventy years of selling records, the limitations of technology did not allow for a disconnect of the physical commodity from the content.  However, if the industry had enough foresight to see where technology was going and understood that they were selling music not records, they wouldn’t be in the decline they’re in now.

By acting only a few years before the advent of the iTunes Music Store, they could’ve gotten everyone into the habit of using legitimate routes to get music.  Doing this would have thwarted the birthing culture of piracy that has now become a common part of our digital vernacular.  For average layman, getting pirated media is not convenient nor particularly easy to do, even to this day.  Yet, in the years it took the music industry to react, the world learned how to effectively use the black market.