You don't mention any of these possible causes though.
> interpreted as people willing to buy music just fine provided it sounded good and kept sounding good
Yes, CDs replaced cassettes and records. They had better audio quality and were nearly as small as cassettes. But cassettes weren't much worse overall than records. The audio quality wasn't as good as vinyl (though that came mostly from cheaper tapes, good tapes has fairly competitive audio) and aged more quickly, but they were much smaller, which was a big advantage. So overall, cassette piracy was competitive with vinyl sales, but not with CD sales.