Yes it's stupid - but for the music labels, it's like this
"We have to store 50,000 copies of the same music on CD's and records in order to sell them, which takes up retail space and storage space - so you must do the same thing too! Amazon, Google, you guys better buy 50,000 hard drives to store the music, otherwise you guys are cheating!"
If the music industry wasn't so inflexible maybe HMV and music retailers can move to "cd's on demand" or "ipods on demand" where they provide a stack of blank cd's or allow you to plug your ipod/iphone/media player in store and buy the music right at the music shop where the Music industry can control the user experience (ie they can have kiosks, signed merchandise like t-shirts, etc on the side for impulse buys, etc) - it's like the nintendo stores - just with music stuff.
Just this move alone possibly can save indie music stores, but no ... the music industry is so backwards.
In an interview I read a month or two ago, I remember Seth Godin recently saying that a top music executive told him that he thought CD's would make a comeback...
