I think you're wrong.
It is a well known fact that the major labels have produced less records, and most of those records are of less quality. A total lack of innovation and effort on their part is the cause of their smaller (but still huge) profits.
Any industry will lose revenue when it reduces output, this is basic economics. Also bare in mind that a downloaded MP3 is not a lost sale and certainly not a cost to the artist or label, they still have as much music as before.
The MPAA and RIAA as well as their European equivilents have fought to keep prices up and are trying to create an artificial scarcity by stamping on p2p, and reasonable use, as well as reducing output.
I have about 1000 mp3 songs, previously I have had several thousand. Of those 90% are those I already own. In fact many of these songs I own in multiple formats and multiple copies.
I also download MP3's of music I cannot get easily any other way.