Bill Gates says that CDs and DVDs will be the last physical form of media. I'll go further and say: soon consumers won't even be caring about owning files.
Owning files is a way of owning content, and sure we like to feel we own things. But what we really care about is experiences and practices; and as I've hinted before, things only serve us (indeed, they only exist) inasmuch as they let us engage in practices, i.e. do things. (I claim no originality in this).
What does owning media let you do? It lets you play what you 'own' whenever you want, provided you have the right devices, the media is handy, etc.
Now what if someone came and offered you a way to carry on with your practice, i.e. to be able to play what you 'own' whenever you want, in perpetuity, without having to worry about downloading, synching, or copying files (or worrying about physical media, of course)?
The strength of the iPod/iTunes combination is not that it lets you download the files you want -- it is that it lets you purchase the right to engage in a practice (that of listening to a CD you 'own') easily and conveniently.
But of course there are a myriad other ways of doing that. Bandwidth is cheap. Broadband is ubiquitous. What counts is the practice, not the thing.