This certainly suggests that we've crossed the generational line that no longer has any attachment to physical media. The diehards who have to have a CD or an LP in their possession are a dying breed and represent a shrinking customer base that becomes less relevant every year. I don't really have a horse in this race, as a consumer, since I've adapted to every format that has come along for the last 40 years, and I will continue to do so for the next 40 years.
As for how it affects musicians, that's an interesting question. It seems like there are fewer superstars being cultivated, but the upside is that digital distribution allows a much greater diversity of product. It may be harder than ever before to become a millionaire, but the flip side is that it is easier than ever to at least get your creative vision out to people. I think, ultimately, it is a positive development.