The RIAA doesn't think there's any real demand for legal digitally downloadable music, at
least that was their stance for years. Their view was that people who
actually wanted to purchase music would want the CD. They resisted the
change at every turn, until they finally had no choice... either do digital
sales of have no growing market at all.
2006 saw sales of digital music nearly double over the previous year,
reaching the $2 billion mark, or 10% of all music sales. This increase
supposedly offset the decline in CD sales. It's hard to argue that there
isn't a profit to be made when digital tracks, which have no physical production
or distribution or storage costs associated, net $2 billion in sales.