Digital music downloads -- the legal kind -- appear to have leveled out according to Bloomberg.
“The download numbers suggest that the iPod’s iconic success, which has driven up Apple’s share price almost sixfold since 2001, isn’t translating into new music sales the way the evolution from vinyl albums to cassettes and then CDs did,” says Bloomberg’s Charles Goldsmith. “For many users, the portable devices are just another way of stocking and listening to music, not an incentive to buy new music,” he says.
One possible explanation is people still don't see legal downloads as intrinsically better than stolen music or music from their CD collection which, of course, it isn't. Apple could offer lossless downloads and advertise it as The Next Great Thing. Already, MusicGiants provides lossless at $1.29 a pop (plus $50/year fee), but hasn't done much to change the industry.