There are a few reasons for declining sales:
1. iTunes pricing has stayed high while competitors, especially streaming services , combined with mobile broadband, seem more appealing nowadays, especially to those used to Apple-style in-app-purchase or subscription. Subscription failed before, but with most smartphone able to do it, it is definitely winning.
2. People still love to own music. But, people used to have 16GB to 160GB iPod. Now, most people have 16GB iPhone or even 8GB iPod touch, and over half of that is filled with apps and personal data and photos. What's left is not enough for buying more apps or music. If you don't have space on your phone, how can you buy? People spend more time on their mobile devices now, but they don't have enough space on there to store music. If Apple wants to reverse this, maybe start by 32GB minimum on the iPhone, and maybe just $50 to increase to 64GB, and another $100 to $128GB. I can't believe no one has pointed this out.
3. The iTunes and iTunes store has stayed the same essentially for years. Nothing major has happened or no innovation about it. It is indeed less exciting. And I do still use eMusic to buy music, ,which is about half price of what iTunes offers.
4. iTunes match will still legitimize some illegal downloads. Those who most likely to buy music are also those who likely to pirate music. Now they can just pay iTunes Match to legitimize their library, once, or every couple of years.