I don't have any sense of how much music is bought as albums and how much as singles, but I would assume albums dominate. (Anecdotally, nobody I know buys singles.) You say digital buyers don't have the incentive to download an entire album -- but what not?
I've listened to a lot of albums over the years, and only half or less of them were 100% great songs. A lot of them were like 1-2 great songs, the ones that interested me enough to check out the album, with the rest being filler songs that never would have interested me on their own. Now granted, my taste in music is not what one could call "refined", I tend to prefer "catchy" to "artistic," but it does loosely conform to the industry as a whole these days.
With CDs, they release them such that on day one you get the first single, then soon after the full album, and then maybe a handful of other singles over the next few months or year, and if the whole album is truly great then it's much cheaper that way then getting all the singles, and most of the songs will never be singles anyways, while if you only like 1-2 songs off the album then that would be cheaper, although you might have to wait for the second or third single to drop. With Digital, you can listen to each song individually and buy only the ones that interest you, usually for cheaper than singles CDs. Unless you like the vast majority of the album, singles would be a better deal. Mylo Xyloto, for example, is listed at $8 for the album, 14 tracks at $1 a piece. If you like EVERY song on there, you'd save $6 on the album. If you only like seven of the songs, you'd save $1 buying the singles. If you only like two of the songs, you'd save $5.
If you do like the album, buying the digital album is still much cheaper than the physical CD, $7-7.99 being the highest
price category for albums on Amazon, and you get the same songs you'd get on the CD. Many of them, good albums too, are $5 or less.
I think it would be a great loss if a move to digital only resulted in the the death of the idea of an album as a coherent set of songs, and bands only recorded occasional singles because that's all that they could sell.
I don't think that's likely, I think that people who are happy with CD albums today, if digital becomes the only way to go, will likely continue to buy albums, my only point was that If people today are
buying albums, there's a higher chance it's in CD format than digital, given how much more convenient digital is for "piecemealing" it.
I am not sure if we've progressed in any way since vynil records...I was at my friend's place a while ago and we started browsing through his record collection, and playing them on the record player, it was wonderful. Is it just nostalgia or do they have some quality that you just don't have with Cds or mp3s?
They do, they just aren't nearly as convenient. They take up a lot more space, have much bigger and less portable players, etc. Nobody questions that they have an artistic advantage to them though.