HOW they are doing fine, I have no idea. I know I sound old, mainly because I am, but I am quite astonished what my nearly-teen daughter listens to. It's not that I don't get it... some of it catchy. But so much of it is just terrible in every way. I pull songs off of youtube for her, mainly because I can then monitor what she listens to and I can look up the lyrics as well. Also, she listens to things like parodies of songs and other things that aren't necessarily under the thumb of the music industry.
The other reason I can't believe they doing fine is because the entertainment industry has never really embraced digital music. If they had done so back in '98, '99, 2000, etc. they would have been able to capitalize on the desire for it. Instead, they fought against it. Just like VCRs, cassettes, CDR, DVDR, etc. They just can't loosen their grip on trying to maintain complete control. This is no different.
And I will say, I do listen to youtube at work, it's easy to just pull up some music. And if there is a particular old album out there that I don't have... it wouldn't be inconceivable to just download it from youtube, rip the audio, and run mp3splt with silence detection to get individual tracks.