Is music quality moving away from the "audiophile"

Yes. Sound engineers are quite adept at "gumming up" the sound with "compression and over-amplification and fake digital reverb and all the other favorite tricks".
Still, while compression certainly does degrade the sonic quality of what is put down on vinyl, and of the music we listen to live in the analog world in which we actually live, compression of digital files can be compensated for during the decoding of them. The technology/software just has not fully arrived there, yet. The current software isn't "smart" enough.
On another note, many young people, today, DO care about sound quality. Teens, like my daughter, are seeking out turntables and vinyl pressings more and more because "they just sound better". While record companies' CD sales are declining, their LP sales are increasing. Just look at the increase in bands coming out with their latest recordings on the LP format.
I went into a Compusa a couple years back inquiring about the best way to get the music off my LPs on to my hard drive. The young man behind the counter said, "Why would you want to do that when records sound so much better?"
And, the other day, my daughter said to me, "Dad, I am getting your Bob Dylan collection when you're dead, right?"

Here come the posts confusing data "compression" as a means to shrink a file size with audio "compression" which makes the audio louder yet less dynamic.

Here's a link to an excellent site, and organization "Turn It Up" that talks about what many recording artist and record producers are trying to do to improve the dynamics on recordings and get away from the wholesale "compression" of recordings.

http://www.turnmeup.org/

Are you surprised that the total gestalt of the culture is turning to crap?

Chashmal - my thoughts exactly. oh well!

Arthur