Reports of the death of the record company may be exaggerated, but there is little doubt that the industry is facing a prolonged bout of ill-health.
Last year was the worst ever for the European music business in terms of a sales decline, according to one expert, and it is feared that revenues won't rebound for another couple of years yet.
The problem is that sales of digital music are not making up for declining CD sales in the way the record bosses hoped.
Though European digital spending was higher than ever before last year at 401.2 million euros (£297 million), it was just 13 per cent of the drop in CD sales.
It has led to a fundamental re-examination by the industry of ways to drum up new revenues, alongside the inevitable cost-cutting after last week's job losses and restructuring at the private equity-owned music giant EMI.
Sales of physical format music have plunged across the world in recent years.
The number of CDs sold in the US last year was 449.2 million, according to Nielsen SoundScan, down 19 per cent from the year before.
In the UK, physical album sales were 131.8 million during 2007, down 13 per cent in 2006. Sales of CDs and other physical formats also fell by nine per cent in Japan, France and Spain.
Total UK album sales, which provide 90 per cent of the industry's revenue, fell nearly 11 per cent last year. It was the third annual drop in a row.
Digital music accounts for just 10 per cent of music revenues - equivalent to a niche market. And with 95 per cent of downloads still not being paid for and with no mechanism yet to clamp down on what is technically theft, a big upturn is not on the horizon.
Music industry specialist Mark Mulligan, vice president at analysis firm JupiterRe-search, said the business decline was something more than a dip in fortunes.
He said: "This is a fundamental change in the structure, shape and size of the music industry.
"Music as a premium format is becoming less important to consumers. We have more music freely available to us than ever before - on the internet, TV music channels, digital radio.
"The challenge which the music industry has got is moving from where it is all focused on transaction-based revenue, to one where they have to monetise consumption.
"What they need to do is breathe new life into the digital format."
That sentiment was echoed by the new boss of EMI, which boasts acts such as Coldplay, Lily Allen and Robbie Williams.
Terra Firma, run by the financier Guy Hands, bought the historic company for £3.2 billion last summer after it racked up a £264 million loss last year. EMI had been struggling with falling CD sales, particularly in the US, and music piracy.
Mr Hands unveiled a "revolutionary" new structure for the label to enable it to cope with the digital age.
As well as up to 2,000 jobs going in the next six months, it will see big cuts in the label's roster of 14,000 artists - three per cent of whom are reportedly profitable.
Big advances paid to bands are also set to go, with artists being paid on performance. There will also be a drive for corporate sponsorship of acts and greater pressure for people to pay for digital music.
The revamp came after a number of developments for the industry that would have made uncomfortable reading for Mr Hands and other record industry executives.
US band The Eagles distributed their long-awaited comeback album Long Road Out Of Eden without any help from a record label.
Madonna left Warner Music to strike a deal with the concert promoter Live Nation. It gave Live Nation rights to all her music-related projects - including new albums, tours, merchandise, websites, DVDs, sponsorship, TV shows and films.
She said at the time: "For the first time in my career, the way that my music can reach my fans is unlimited."
And Radiohead - who quit EMI in protest at last year's takeover - made their new album available to down-load from their website and asked fans to choose how much to pay for it.
Mr Mulligan said the competition was forcing record companies "to learn how to do business all over again".
He said: "They can no longer rely on one shiny disc.
"Digital music is currently failing in its three key strategic aims of successfully competing with free music, offsetting declining CD sales and generating a format replacement cycle.
"The music industry has, however, found a new dynamism and willingness to experiment, which will help digital music fulfil its promise."
One initiative rolling out this year is a tie-up between the world's biggest record company, Universal and the world's biggest mobile maker Nokia.
It will see Universal artists' music supplied onto new phones, which can then be transferred onto a computer. Instead of charging customers directly, Universal will take a cut of the price of each phone.
Nokia sold 111 million devices in the last quarter of 2007.
There are other glimmers of hope, with the UK's 150 millionth download sold in November 2007, just eight months after the 100 millionth.
The representative body of the British music industry, the BPI - which tellingly no longer uses its unabbreviated title "British Phonographic Industry" - has admitted the business is in a period of transition.
BPI chief executive Geoff Taylor said: "The UK market has shown considerable resilience in recent years while global recorded music markets have declined.
"The industry continues to innovate in developing new online and mobile business models.
"Nonetheless, this remains a period of transition, and the industry's move to tap into a wider pool of revenue streams, particularly in digital, will take time to offset the combined impact of digital piracy, album unbundling and difficult retail trading conditions."
Music industry adviser Danny Evans, a director at economic and finance consultancy LECG, added: "EMI and the whole of the creative industry are facing problems and as yet it is not clear who is going to win the current power struggle.
"The crux of this issue is that success in the creative arts business is highly concentrated and a lot of money is invested on artists that generate little or no positive returns for the record companies. To talk about the death of the record company is vastly misleading, but it is going through a period of change and will take a while to re-balance itself."