It's well known by any musician worth their salt that the sales of their music don't make them a thing. The record company gets most of that cut with a meager amount going to the artists (meager in comparison at least). Most record contracts require that artists give up their intellectual property to hand the rights over to the record company. If you ask me, THAT's theft. That is what's killing the industry as artists don't even own their songs. This is the reason that the price of ticket's for live shows has gone up a heck of a lot in the last 20 years. You can end up paying over £100 for some of the more famous bands and artists to sit at the back of the O2 arena and see what look like stick men prancing around a distant stage. And even smaller venues are charging much more than they used to.
Quite simply, music WILL end up being free in the future, the cash will come from advertising and live shows and the industry won't have been damaged for it at all, possibly improved.
The other factor is the market flood, things become less valuable when there is more of it around, basic economic rule. The big companies are manufacturing bands left, right and centre and signing artists that can only sell one successful album as most artists that do get contracts never reach that high level of fame. They increase their odds of making money by introducing a one-hit wonder to the scene and then pulling all their support of them after the initial fanfare has died down to pump it all into the next one-hit wonder. That means every song has become essentially value-less because there's so much mediocre, cookie cutter crap coming out all the time.
It is definitely illegal to download music in the eyes of statute law but morally and ethically I'd say it isn't. The companies aren't losing money because of it, at least no directly, the artists are being screwed by the record companies and then buying the bullshit they're fed about it being the fault of men with parrots, eye patches and computers and the consumer is getting a raw deal because the companies aren't pushing the music they like but instead taking away support to fund the next album of Lady Gaga and whatever new pop sensation that won't last a year. This is the industry that made the term indie a genre rather than a way of creating content!