I have no idea if Napster really hurt record sales, but I do have a significant observation. Lately, I've been getting CD's(and DVD's) out from the Library (they have all the new stuff the kids are listening to!).
Here's the interesting thing - when I was using Napster/Grokster/Morpheus/Hotwire, IRC & etc...) I never downloaded an entire album. I'd grab the one song I wanted, then most likely go buy the album. In fact, this is exactly how I ended up buying Wallflowers & Green Day albums in particular.
Over the past few months, I've gotten more than 20 CD's from the library and have totally stopped using any online music services. Is this smart? Dumb? Am I a thief? Not sure... but in my mind... I bought more music when I was using Napster than I'll ever buy now.
Add the fact that most/all online services restrict how you can use your music and the scene continues to be frustrating for consumers. Why can't I listen to music I bought from buy.com through my Tivo or freely copy them to my other machines?
I can't wait to see what happens with DVD's once we have enough bandwidth.