CDs killed the record label.

Well, I partly agree with the idea put forth, but I think it glosses over a few things. Namely, the price scheme. I remember when CDs were first emerging and the line was touted that, as the prevelance of CDs grew and the medium got cheaper, albums would cost $10. They never did. You can find some new albums for $15, but most are $20 or more.

Anyways, the notion that cheap CDs and shoddy album compilations is what really caused such massive revenue loss for record companies is interesting.

Traditionally, the majors blame the internet for devaluing music, but the most forward-thinking in the business are starting to reverse this equation. “In a way, the CD is what destroyed the music business,” says Joe Mardin, a musician, producer, arranger, and engineer. Mardin grew up in the music business; his father was Ardiff Mardin, the legendary producer of Hall & Oats, Norah Jones, Aretha Franklin, and others. “People were buying millions of CDs to replace their catalog," says Mardin, explaining how industry greed ended up killing the Golden Goose. “There was this imperative that started to emerge: 'You must fill up a CD with as much music as possible,’” Mardin says. “The rest was filler. You ended up with albums that were one or two hits and a bunch of wanna-be hits.” The record industry itself killed the album, trying to maximize profits.

"The very concept of the album itself, a consecutive body of work designed by the artist to be experienced in its entirety, has been lost," explains Caraeff. And as a result, the traditional labels are contracting radically, morphing into a much humbler business. "The labels will survive," Mardin predicts, "but with much smaller margins and sales." And that might not be such a bad thing for music—or musicians.

After the current contraction, a few artists, like Lil' Wayne, will still be able to rake in large sums. But the top-heavy shape of the industry as a whole will change. There will never be another 100-million-selling album, there may not ever be another 20-million-selling album. “The profits were just gloriously obscene,” says Bob Sherwood, who was head of marketing for Columbia when Faith was released, and has had top positions at Mercury Records, CBS Records, and Sony. “You can’t do that today.”

Yet there will always be fans, always be musicians, and—of course—there will always be money. “If you find 100,000 fans who are willing to contribute $15 a year for your music, that’s one and a half million dollars," says Goldberg, doing a back-of-the-envelope calculation. "If you can find a way to get your music to them efficiently and for them to get that money to you efficiently, you can make a very nice living.” It's the internet, not the labels, that connects musicians to their audience. What's gone is the major-label hit-making machinery. “The top is going to come down," says Goldberg, "but the middle class is going to grow."
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