It's merely one man's view, naturally, but the 30-year march towards where we are now with respect to music distribution occurred in a number of stages/steps. The first step was certainly the availability, on vinyl, of music that had been produced "in the digital domain". It was excellent quality (I still remember marvelling at Ry Cooder's "Bop Til You Drop" album), but sidestepped many of the inherent technical limitations of tape-based production.
Once the industry agreed on a standard for digital format of compact discs (14-bits at 44.1khz sampling rate), it made commercial production of CDs possible, since all commercial players could adopt the same CODEC standard. The "convenience" this provided to the industry was that it was possible to generate an infinite number of copies from the same source material, in contrast to the manner in which vinyl discs were produced (the silver platter serving as the mould could only serve to produce hundreds of vinyl discs after which you'd need to replace the platter). It also made shipping and storage cheaper since CD packages were lighter and smaller. The convenience it yielded for the consumer was that the medium could withstand repeated playing without degradation of either the medium (CD) or the playback technology (anyone else here remember running to the Radio Shack or drug store to get a replacement needle?).
At that point, you could still make a dub of a CD to tape (and plenty of folks made cassettes for their car before car CD players came along) and people made their party mix tapes, but there was nothing like an internet that permitted large-scale distribution. The industry would rather you bought a CD than listened to a tape your friend had made for you, but were content to ignore it for a bit since it was inconvenient to make such tapes and they posed little threat. And consumers were also painfully aware that, even with CrO2 tape, dbx, and high-end devices, tape still wouldn't deliver the same quality and wouldn't stand up to repeated playing like CDs could. So the industry relaxed (although they would eventually start rumblings about imposing surtaxes on blank tape) to "recoup lost revenue".
While home computers had already started happening before CDs entered the scene, it took a while before some degree of connection between the world of CDs and computers occurred. You listened to CDs on your CD player or Discman, but you didn't stick them into your computer. That didn't start happening until the late 80's, such that manipulation and distribution of music in digital form hadn't begun with the birth of CD media itself.
Once computers acquied CD-ROM drives (ostensibly for media and content other than music...but it happened to be compatible), "ripping" CDs became possible, and the industry became preoccupied with preventing copying of CDs. Here we saw the first rumblings of "digital locks". At this point, though, we still didn't have compression algorithms like MP3, WMA, etc., and few machines had the storage capacity to accommodate even one CD, let alone several (you probably wolud not have had a hard drive with more than 60meg capacity in 1989, and a CD held about 700meg), so it was all about making a second physical CD.
Once compression algorithms like MP3 and others came into effect, that permitted efficient storage of music. Coupled with increases in the storage capacity of hard drives, it meant that individuals could relocate the contents of many CDs to their computer. In theory, they could share, but remember that so many of us at that point viewed 56kbd modem access to AOL as a kind of holy grail, and the only way to port stuff to someone digitally in any sort of efficient manner (that meant there were still 20 minutes a day when someone could get through by phone) was to sacrifice substantial audio quality.
So, for a time, it was still inconvenient for people to provide perfect replicas of music in digital format in the sorts of distribution volume that might concern the industry. Again, their concern was not with people transmitting copies, but with making copies of the physical medium itself. And even though the MP3 standard came around in the early to mid 90's, we still didn't have portable devices that used the format (which is why you can still find Discman players in pawn shops these days).
Once the "convenience" of high-speed internet access, and MP3 playback devices came about, THAT's when things like Napster started happening, and we saw the birth of broad-network sharing of content. The convenience of high speed internet and digital compression made it possible. Trust me, if we were still doing 56kb modems, and a song was an 80meg file, we'd still be buying our kids CDs for presents, not MP3 playersand iTunes wouldn't exist. Fundamentally the piracy of music has depended on technological changes that made it easier and easier to do.
The music industry tried digital protection, but consumers waxed indignant about purchasing music in one physical format, and being prevented from listening to something they had purchased legally in another.Of course, we quickly forget that the very idea of being able to "legitimately" listen to music in multiple media formats is itself a product of earlier forms of piracy. Your grandparents bought an LP, took good care of it, and may have bought a new copy when the old one wore out. But they never even thought about taping it so they could listen to it at the cottage. Taping itself was a byproduct of the "convenient" new cassette format that Philips introduced in the early 1960s. If tape still consisted of unwieldy 7" reels requiring motors that needed to operate from wall current (because they needed more current than a stack of D-cells could provide), tape would not have become a medium for portable playback, or for pirating.
It's been a constant struggle of technology against technology. Something comes along that makes it easy and convenient to acquire or use music, and the music industry tries to come up with ways to control the distribution and oblige you to buy their product, all the while piggybacking on the convenience of the available technology so that you'll want music in your car, den, hospital room, elevator, green grocer, coffee shop, etc.. For a time their solution was technological. Now, they find themselves resorting to legal remedies because there seems to be no technological panacea.
Myself, I generally only listen to the radio or get my music from a site called Sugarmegs - a Deadhead-iintiated site that archives tens of thousands of live concerts of every kind. Most of them are fan-recorded and uploaded, and a great many are of performers who actively encourage their fans to share such files.
That's my recounting of how we got to where we are. What a long strange trip it's been!