It's not music itself that's dying out, it's the critical culture around it - which to those of a critical bent often looks like one and the same thing, hence the baleful nature of a lot of contemporary commentary. But there's more music being made than ever before, and the barriers to access have never been lower. There's lots I love about old records, but anyone who's even vaguely anti-elitist has to keep the access thing to the fore front when weighing up all the doom-and-gloom announcements.
I think we are devolving away from the mass market model back to the way music was used in the 19th century, with people using it much more actively to communicate within a much smaller circle of people. Instead of piano in every living room, we now have PCs. The level of skill that people now have on software music programs is directly comparable to virtuoso instrumentalists of the past, in as much as those virtuosos didn't develop those skills as an end in themselves, but rather as a means to move people and communicate thier vision. So as forms evolve, the skills set will evolve with it. If I'd put as much time into learning the guitar as I have into using my software, I'd be a regular Jimmy Page by now.
The de-elitism of music means that people naturally withdraw from the meta-critical arena, which is what critics are seeing. Think of how much innovation in 60s music was explicitly an interaction with the concept of the mass-market, and how much of our music/critical culture has decended from that.