I think vinyl is a niche market. Is it making a full comeback? I doubt it, but tons of new economy products started as niche products. .
Absolutely, but it coincides with the the death of the CD and, more importantly, the idea of actually paying for music. It is one physical medium which you can actually get people to buy (particularly in indie, punk, hardcore, metal scenes). I have heard anecdotally that country music is the one area where people still buy a lot of CDs. Now, again, my last album did really well on the CD mail order front, so I am not anti- CD. I just got a lot more satisfaction every time I sold the same music on vinyl.