In some ways, people on this thread/forum really fail to see the big picture.
First of all, stuff like compression and sound quality have really minimal impact on CD sales. Just think how many copies RHCP - Californication has sold with it's atrociously bad recording? Even a lot of real music enthusiastists (I mean those, who buy 50-100 cds or more per year) have absolute no clue about sound quality. I happen to know several people, who have close to thousand albums on their shelves, and still use boomboxes to listen to them. Only a very small minority of listeners are audiophiles, who care about sound quality, and even smaller margin of those actually know about stuff like compression etc.
Second, teenagers and young adults are the most profitable group for music. There are some middle aged men, who buy lots of albums, but usually they are still listening to the old classic rock bands and just buying their remasters, DVDs etc. A vast majority of middle aged men don't really listen to music at all, except some FM radio. Those who do, most likely already have a large record collection and ignore new bands and trends. The kind of people, who think that absolutely nothing worthy was ever made after Pink Floyd. How could you market new bands to people like those?
Teenagers and young adults may not have such a lot of money to spend on albums, but the sheer amount of teenagers into music compared to middle aged men into music is just so much higher. You can also mobilize the entire teenage crowd to buy one single hit album, while older age groups have more diverse tastes. It doesn't matter if teenagers buy only one album in year, if it's something like Linkin Park - Hybrid Theory, which sells over 10 million copies. Someone makes loads of money from that, and every label is trying to do the same.
Last but not least, the quality of music is always left out from those "piracy dropped CD sales another 5%!" arguments. You can't expect album sales to stay high, if the quality of music goes downhill. Modern day artists rarely have long careers and therefore labels don't get wide back catalogues to sell. While classic rock albums are still moderately priced and often bought, modern day pop/r'n'b albums end up in the bargain bin in less than a year, and after two years, absolutely no one is going to buy them. Even more popular modern day artists just mysteriously disappear after two or three albums. It's expensive to constantly find and market new talent and one hit wonders, which also get most hit from piracy.
