In 2010 the total music revenue in North America was:
$6,850M = All music revenue from consumers
$2,238M = All digital download sales to consumers
$3,518M = All physical media sales to consumers
$250M = Subscriptions (mobile and streaming) to consumers
So, while the industry is struggling with lower sales, it isn't as bad as you guys make it out to be above. The consumer is shifting buying habits away from physical media to downloaded digital content. Since digital overhead and costs are much lower for labels, the lower revenue numbers do not inherently mean lower profits for digital downloads.
Despite the fact that LP sales are at about $$87M in 2010 the labels did not completely give up on LPs. Sure, you have a limited selection of vinyl albums to choose from, but the artists can offer LPs if they want. You may see certain short term pop artists start abandoning CDs, but that isn't very likely yet. However, when making a recording, the label agent may ask the artists if they really want a CD or not - making it a choice to offer CDs rather than just assuming there will always be a CD.
What I fear, more than the death of the format, is the death of the long-form album format. In 2010 there were 1,162M singles sold for download but only 83M albums sold for download. If consumers abandon album purchases, why would the great artists even offer full, complete, and engaging song cycles in the album format. Imagine if operas were sold and performed by song rather than in 3 to 5 acts? Or books were sold as chapters or paragraphs?