It is frustrating to see an industry that is so blind and unwilling to listen to it's customers. The reality is these labels are focused on selling a medium of plastic (CDs) and not music. What consumers are asking for is accessibility, choice and convenience at a fair price. Going down to the local CD store doesn't fit any of these requirements.
Digital access provides a great opportunity for distribution of music which has been proven times over. Consumers do not find value in plastic disks. I have no problem throwing away a CD but hold dearly a number of vinyl albums as part of the value was the sleeve, notes and art work. This has never translated well into the CD world.
On the video (DVD) side, Blockbuster is obvious dead or at least dying quick and companies like NetFlix are responding to the consumer and running with the opportunity to provide accessibility, choice and convenience at a fair price. To be fair, a core difference is that you typically watch a movie once or twice and listen to music time and time again. Though I believe there may be a happy medium between the two.
The NetFlix model illustrates that consumers are willing to pay a reasonable price for media content with some restrictions. In the case of video it's typically $10 - $20 per month for unlimited rentals with the restriction of 1 to 3 DVD's at any given point. And they even take care of shipping costs.
Provide me access to an unlimited library of music at comparable rates (as those above) and I'd be will to have some restrictions such as a reasonable number of songs. I really don't need 60GB on an iPod to hold an entire library of music when I can be running around with a few gigs of music that I am listening to and can refresh/update any time that I want. Better yet, work out a deal with Apple, you can monitor my usage on my playlists, frequency, download activity. Now why would I be willing to provide this information? I have no problems providing this if a portion of the proceeds are distributed to the musicians in proportionate royalties. Isn't this not far off what DJ's pay royalties for? Shouldn't organizations like ASCAP take hold of this opportunity?
Restricting distribution of music doesn't do anyone any good. Get the music out there and lower the cost and risk of checking out a new band, track, or genre and I am sure that the end result is a better deal and chance for the artists.