This article from eMarketer shows that artists’ revenues from recording performance rights (i.e. payments by radio and TV stations) as well as synchronization licensing (i.e. the licensing of music for commercials, television shows, films and videogames) are growing fast. Together they totaled nearly $4 billion in 2006.
So while the recording industry, i.e. the people who sell CDs, is in trouble, the people who actually create music have many potential sources of revenue even if the end user isn’t paying for CDs.