Less tech-savvy, the wealthy, and those with less time to spare, still pay for original, official music, eg, Boomers. Huge stars are created and then disappear in short time frames. Increasing sponsorship and less upfront methods of promoting music. Music companies co-opted illegal distribution forums, eg Napster, Gnutella, as a new means of distribution. Music companies using illegal distribution forums as test-beds and ways to begin promotion of new artists.
Companies make more money from selling merchandise, websites, games, movies, access to stars.
Computer-generated stars, fine tuned to today's tastes. People are fans of CGI stars' creators, rather than the stars themselves. Music which is brand new isn't available via illegal methods, so people will pay for the truly cutting edge stuff. Gen Y are now aged 16-31, voting, buying houses, starting to have children. More non-domestic stars.