Unfortunately yes! Nobody buys albums anymore. It's all about downloads. Downloading the MP3 file seems to be much more practical nowadays, given that you can have all your favorite music with you everywhere you go. Carrying an iPod is far easier than carrying a portable CD player.

Besides, labels are actually benefiting from this. Packaging the physical album is costly and far more expensive than just uploading it on iTunes, Amazon etc.
That said, I don't think it's just CD's that are going through a popularity crisis. It's the whole concept of full length albums! People would rather preview an album and download the few tracks that they like the most rather than buy the whole album only to skip half the tracks a week after they purchase it. That's why iTunes, despite its domination in the singles marekt, is not a huge force in the album's market. Noone downloads albums. Maybe it's the artists' fault that don't bother with cohesion and quality anymore and just put together a collection of catchy tracks hoping 3 of them are surefire hits. But the mentalities of the consumers have changed too. It's not
cool to buy albums anymore.
I'll still buy physical cd's as long as they still release them though. Nothing compares to a physical copy!