Brass tacks is that the music industry was too arrogant - at least at the 'big end of town'. They had lived so large for so long* that they were dismissive of any other models that looked like they might result in less profits.
They thought that their model could persist forever.
Spoiler alert: they were wrong.
Now, as some who have read my posts touching on copyright may know, I am no supporter of illegal downloading. I did it to a small extent when I was much younger but can categorically say that there is NO music that I listened to more than a handful of times that I did not purchase. Often times this resulting in entire back-catalogues, as it did with Morcheeba and I purchased their newer stuff, unheard, as well.
But that is the point - it's a medium that lends itself to discovering music in a way that going to the local music store used to but that modern life has made more difficult because people just don't have the time to go browse like they used to.
Unfortunately, music has now lost a lot of value for many, with things like Youtube streaming providing so much music for so little compensation for artists and the several dominant players exploiting artists every bit as much, though in a different way, as the old moguls.
As Gillian Welch sang: "Everything is free now".
* - Only after typing that did I make the Batman connection.