I also paid my respects, as it were, to the Virgin Megastore at Union Square. The signs say they are going into their last week, and that everything is now 40%-off. There is a lot of stock left on the shelves - I'm guessing they consolidated a bunch of the stuff from the now-closed Times Square location. Of course, since that's 40% off of the list price, it's basically Amazon pricing. 
However, since the electronics and accessories are also 40% off, there are some pretty good deals in that department.
*However, I was tempted to buy one of the many(!) 5-disc CD changers they used for the in-house sound system. They're going for $30 each. We shall see...
Has the Virgin in LA bit the dust too? I was shocked, when in London this January, to see the Virgin Mega Store in Picadilly has closed. Is the internet just killing them all? The HMV looked shabbier than I had ever seen it as well. Dress Circle was holding its own, but not quite what it once was.
The Times Square location closed about two months ago, and I believe the Union Square and L.A. locations started their official Closing sales at the beginning of this month.
As for what did them in, well... Yes, the internet (legal and illegal downloads) undoubtedly contributed to their demise. However, I also think that consumers just got smarter in a sense. There's been some weird "math" in regards to CD prices: as the cost to produce them came down, the retail cost of them went up.
I also know that Virgin, in particular, was affected by the real estate market. Their stores were in prime locations with ever-increasing rents. Rumor was the the rent on the NYC locations was going to increase 3 to 5-fold if not more.
