CD sells are also down because consumers have less discretionary income and more things to spend it on. For instance, video games, dvds and a host of other things that may now entertain them. In addition, during the 90's the record business saw historic sell increases because fans were replacing their existing catalog of vinyl and cassette tapes with CD while buying new releases. Remember than in the 90's the economy was reportedly doing better than it is now -people had more money. Record companies also continued to inflate CD prices while the cost of production decreased significantly due to better technologies and economies of scale (the more of something you produce the less it cost per unit). After awhile consumers old music catalog began to be replenished with the new CD format, lessening the need to buy more CDs.
At the end of the day there are plenty of factors that have nothing to do with downloading that caused CD sales to be greatly reduced over the years. Downloading has been the scapegoat, but I suggest that declining CD sells would have occurred even if downloading was not a factor given all the other conditions mentioned. I'd strongly suggest reading Does Music File Sharing Boost Sells and Is Your Music Business Global?
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