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I'm currently doing my dissertation on this very topic. Of course downloads have affected the industry but it was in many ways the industries fault. Spent years pissing about trying to stop it all, no innovation game from them what so ever. Then when they do offer legal downloads, it comes at a price, which in my opinion is still way to high. That and 'new music' being produced is becoming less and less, along with radio stations becoming even more restrictive on what they play. It seems to me that a combination of these things has hurt the industry more than downloading has.
I think that the music industry has to follow the model of one other business. The only other billion dollar business around, that consumers pay way over the odds for, when they could get it for free, is the bottled water industry. Package it up right, put the service behind it and give the wookie what he wants at a reasonable price. If they achieve this then maybe more of us will turn to their legal, highly highly highly profitable download services.
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"The only way to discover the limits of the possible is to go beyond them into the impossible." - Arthur C. Clarke
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