Ian Rogers, an old-school music-tech geek who runs Topspin, a music/tech startup, gave a hell of a keynote at the GRAMMY Northwest MusicTech Summit, in which he told the most powerful people in the music industry to suck it up, get over the rhetoric about stealing and lost CD sales, and build businesses with the net, not against it.
The lamenting we read in the press is not the story of the new music business. Continuing to talk about the health of the music industry on these terms is as if we'd all been crying about the dying cassette business in 1995. The difference is that when we moved from cassette to CD the winners were the same (big companies who owned access to cash, distribution, and marketing) and the definition of winning was the same (more units sold for these big companies).
As I've been saying for years, the physics of the media space have changed and you shouldn't expect the winners or even the definition of winning to stay constant, so simply looking at how iTunes replaces CDs doesn't tell the entire story.