The price of gas operates this way. For a given locality, if there is no other gas station around, the prices tend to be 5-10 cents higher per gallon than areas that have lots of gas stations nearby. In the areas with high competition, the profit margins tend to be razor thin and prices tend to fluctuate in accordance with the underlying cost of oil. If the price of oil drops, the price of gas drops because once one station lowers their price, all the others in the same area have to as well or risk losing their customers.
I think the price of music has also dropped for the most part as the technology has changed from CD's to mp3's. Before iTunes distribution took over, it used to be that you couldn't go to Sam Goody or FYE or Tower Records and purchase a new release of a popular band on CD for less than about $16, and less relevant bands or older releases from the popular bands for about $12. Now I can get all the songs on a current album from iTunes for about $10-12, and older releases for popular bands in the range of $7-10. Some are admittedly more than that because the album price is now determined on a per song basis, but from my perspective, I am spending less overall than I was before. (and arguably receiving less, mind you, so this is not a perfect example).
Ultimately, it just depends on how cut throat the competition is and what the barriers to entry are in that particular market. More competition will drive prices down if the current margins can be squeezed while still turning an acceptable profit.