Illegal downloads are still beating legal online music in Europe, analysts have found.

A report from analyst house JupiterResearch discovered that consumers are three times more likely to get their digital music from illegal file-sharing networks than pay to download the tracks from online song shops such as iTunes and Napster, with 15 per cent of consumers using P2P sites and five per cent using the legitimate online shops.

I've seen this article in a few places - including my morning paper on the bus to work. None of the articles have gone into possible reasons why people aren't buying though.
I for one haven't bought any music in over a year - because there's not been anything I think is worth buying, not because I download it illegally - and after recent events I refuse to go and buy any music that is DRM protected or from Sony, and I know a lot of people who are the same. That's a very large chunk of the market that people are refusing to buy. It's very possible that the increasing gap between legal and illegal downloads can be attributed to this, and that the record labels just need to do more to stop putting people off buying music from them.

Young 'prefer illegal song swaps'