Another way that an artist's revenue is diluted is the poularity of web-sites selling second hand CDs such as eBay, U-bid and others. The amount of money that an artist receives from these sales is exactly the same amount as they get for an illegal download - £ 0.00/zip/zilch.
But of course sites like piratebay are totally different because of the sheer volume of downloads. For example, Iron Maiden's new album currently has almost 3500 people seeding it (through various links) so someting like that has gotta be bad for revenue. Not everyone who downloads it will buy a physical CD/vinyl version (and would certainly not buy an official download version - what would be the point ?)
I got an mp3 version of the album 5 days before it was officially released in shops, BUT I'd already got the double vinyl AND the CD versions on order from Amazon - I was just too impatient
I have official download stuff as well - Picture Palace Music, Arcane, the TD download stuff also (like the Haussmann concert). I would, however, rather have a CD than a download, for bands I really like. But for investigation purposes I have downloaded albums to listen to to see if I like them. Those I don't like I put in the recycle bin on the PC and delete. (It's not done any damage to the artist because I wouldn't have bought it anyway so there's no lost sale)