A NY Times op/ed piece explains how the music industry is being transformed - less by piracy than by streaming:

The problem is that if people can get the music they want for free, why would they ever buy it, or even steal it? They won’t. According to a March study by the NPD Group, a market research group for the entertainment industry, 13- to 17-year-olds “acquired 19 percent less music in 2008 than they did in 2007.” CD sales among these teenagers were down 26 percent and digital purchases were down 13 percent.

I listen to Pandora a lot (I have it on as I write this), and I got introduced to the service by my daughter a couple of years ago. I've noticed that she's buying less music, presumably because it's easy enough to just stream it. What's happening is simple: the various middlemen in the music industry are being swept away, and the artists are getting a much clearer path to advertise directly to fans. They can sell some music (at better profits, with fewer leeches in the middle), and sell other things only they have - namely live performances.