It's not a bubble, the product just became obsolete with newer technology and demand for industry slacked with internet marketing. CDs were (and still are to some extent) a fantastic media for storing music, but mp3 has huge advantages.
The late 90s was also the end of the pre-internet era, where the dominant way to market music was radio, TV, and print. In 1995 you had to try hard to discover music outside the mainstream. In 2005 you could go to MySpace and listen to an hour of music without ever hearing a top 40 song.
Well, there was a period when CD's were the cool new thing and everybody was buying all their record collection on CD again.
So, not only the labels were selling music by new artists at their usual pre-Internet levels, but there was also a big demand for old music in CD format. I suspect many older people that would not usually buy new music ended up buying many of their old albums again.
The late 90s was also the end of the pre-internet era, where the dominant way to market music was radio, TV, and print. In 1995 you had to try hard to discover music outside the mainstream. In 2005 you could go to MySpace and listen to an hour of music without ever hearing a top 40 song.