In terms of sales of physical CDs, or in terms of cash value, it's not doing as well.
Perspective.
Obviously the industry is cranky because they're not making as much money, but from a pure sales point of view, they're doing better than ever.
Peter Martin puts it in perspective (via LawFont, speaking specifically about the new 3-strikes copyright laws which are being introduced because "music downloads are killing the industry"):
I have been collecting Australian sales figures going back to 1982.In that year we bought a total 29 million units (cassettes, albums and singles) – around 2 per person.
Ten years later after almost a decade of the compact disk we were buying 42 million units. Five years after that at around the time the internet was taking off we were buying 50 million.
Another five years later after the introduction of CD-burners and file-sharing services such as Napster we bought 59 million.
And after the most recent five years of sustained CD-burning, intensive file swapping, the introduction of the iPod and near continuous hand wringing by the industry, we bought 99 million – easily an all-time record and an impressive jump of 23 per cent on the year before.
Peter points out that if the industry were to roll back time to before the internet, they'd be selling far less product then they are today.
The 99 million figure includes digital downloads (17 million in 2007) and ring tones, which might be considered unfair in such a discussion..
Obviously X million digital downloads of single songs or ring-tones are worth far less to the industry than the same number of physical CD albums sold, but a sale is a sale. And the music industry is all about how many records are sold is it not?
As a million bloggers have said before, all the numbers point toward is a shift in preferred music format, not a drop in music sales.