Everybody seems to believe it was the MP3 that killed the album and I admit it made it nervous and easier to ignore, but it was CDS that brought an end to the album.
Here is why.
The perfect length for a rock album is 30 minutes , 5 by 5 -3 minutes or so per song. And because of the simple amount of grooves available, a vinyl album was pushed to hit 40 minutes (Costello had to explain why Get Happy!! ran long in the liner notes).
CDs were twice as long at a possible 80 minutes and nature, which abhors a vacuum, rushed to fill it up. So albums started clocking in at AT LEAST 50 minutes (hip hop dealt with it by sticking in crappy comedy sketches). And guess what? The bands didn't have enough good material to cover 50 minutes. The result was good songs got sunk in a quicksand of crappola and what might have made a very good 30 minute album, made a terrible 80 minute album.
This death of quality material was endemic. From Neil Young to Wu Tang Clan, the albums were just awful so when people discovered they no longer had to buy entire albums, they were primed to NOT buy albums, after getting stuck with one lousy CD after another. If we had lived in a time of "Beggar's Banquet", "Axis: Bold As Love" and "The White Album", the mp3 couldn't have killed off the album. People would have wanted to buy them.
And sure, if the MP3 never existed, CD sales would be through the roof BUT the album as must own art form was killed by the CD.