Whether the rot set in with the arrival of iTunes, or the earlier availability of music through illegal file-sharing sites, isn’t clear, but it seems that a whole generation now has the belief that music is essentially a free commodity, rather than something for which one should pay.
Part of the problem is that the very forces held up to be the saviours of the music industry sometimes do themselves no favours, for example by treating music as nothing more than a promotional tool.
Andrew Everard makes some good points here, though I disagree that iTunes is to blame. Quiet the contrary; the iTunes Store is what got people to buy digital music. But the commodification of music, and its overabundance, have certainly made it seem that music has little or no value any more. But even more than that: most people just don’t care about music; it’s just wallpaper for them.