The music industry isn't quite dead — it's merely completely unrecognizable from what it once was.
The following chart from music industry analyst Mark Mulligan explains: Since 2000, overall global music revenues have declined just 3%, not exactly a cataclysm.
But actual recorded music now comprises just 36% of the industry's revenue stream:
So what has taken its place? Tours — revenue growth in which has grown 60% since 2000. Unfortunately for artists, industry heads have adjusted deal terms so that, since 2000, they've take an ever-increasing share of the live pie. Artist income in general has been declining for five consecutive years, Mulligan says, in part because labels now sign acts to "360 deals" that give them control over everything they do.
...Even for these consumers live is, in terms of total time spent, just a small fraction of their music consumption. So labels are faced with paradox of making less money from artists yet those same artists still needing the recording in order to drive live and merch income. This is why we ended up with 360 deals.
And this shift is still not complete. "Expect every traditional element of the industry to be challenged to its core, expect dots to be joined and old models to be broken," Mulligan writes. "But be in no doubt that what we will end up with will be an industry set up for success in the digital era."
But he says nothing about what the era will look like for artists — probably because he doesn't have to.