This is all nice and well if you assume that CDs are the only source of income. Now, the record companies like people to think that the artists only income is from CDs and that we should keep buying CDs otherwise the industry will die.
Let's, for a moment, assume that music IS actually a healthy industry (one where there are (runnnig/development) costs and money is to be made legally) then piracy can be seen as a healthy competition, all though illegal in most countries. Record companies have a monopoly on their artists. If you want Michael Jackson, you'd have to pay Sony. You have no choice other than NOT to buy Michael Jackson's music. And as popular artists (the ones the parent claims are "hit the most") get more general interest, they sell more of it and are broadcast on the radio ,pre frequently which again boosts sales. Sales to which no competitor can compete, as all Michael Jackson's CDs are from Sony. I'm not going into the theories that record companies force radio stations to play more music from other (more unknown) artists from the record company's repertoire. I do think, judging from their Mafia approach to their competitor (piracy), this is a sound assumption.
One other thing is adjusting your company and strategies to the market. When the NY harbour did not adjust to the new sized containers (because otherwise a big group of people would be out of work, because less employees were needed), they were overtaken by a nearby harbour... why? Because they DID adjust. That's what happens in a moving market. Now the music (and film) industries do not do this. Why not? Because competitors can not start selling their artists without having to go through the record company that also sells the CDs. New artists can do this, but this takes time (and is much less affective). I for one would LOVE to pay for good music. I listen to FLACs because I live in 2009 (soon to be 2010) and not in the eighties anymore. So, where can I buy, high res (again; we're not living in the eighties; enough with the 16/44.1 already!) recordings? Sure there's Linn Records and the like, of which I've bought quite a few albums. But where can I buy my high-res Michael Jackson albums? Oh.... I CAN'T! Because the record companies have frozen the progression of their market for decades! And now everyone's pissed off, technology has advanced to a point the record companies have lost it (quoting Sony: "All the Internet has brought us was bad stuff, like Piracy". Friggin fossils!). So let them go belly-up! Let them, for once, feel what happens if you don't progress. I'd love to lend a hand :)