Bonnie-
The elephant in the room is legal availability---ROunder, f'rinsance, has an exclusive deal with Amazon. I've been seeking permission to re-issue out-of-print CDs from various sources; I feel that there's a distinct added value over MP3's in fidelity, ambience (notes and lyrics) and programming (as opposed to single-song downloads. Sadly, for larger CD producers, this doesn't compensate for the much lower costs of providing downloads.
    CDs will likely survive to service a specialized audience niche:those of us in the business can only hope that the niche will remain large enough to support our modest needs.