Sounds like a premise for a movie... http://en.wikipedia.org/wiki/Idiocracy

You're right about the cost of downloading, it just doesn't work out for the average guy being able to afford it. What I think will happen is a shift from having a downloaded copy where someone is paying per item to some form of subscription model. This being accomplished by either streaming audio/video or some kind of checkout system. Unfortunately, the logistics accomplishing this with portable media like the iPod aren't neatly clear cut - there'd be some kind of DRM to get labels to commit. I think one of the larger players out there already has some kind of subscription model but the popularity isn't great enough that I remember the name and conditions.