The people who make content for a living (music, movies, games, books) once used the physicality of their medium as a sort of control. The fact that you HAD to have a CD or a floppy disk to transfer content around was it's own sort of lock and key. The only thing they had to worry about was controlling access to those physical things.
And that's why mp3's scared the bejeezus out of the music industry for so very long. It meant the pirates no longer had to worry about things like inventory.
But as time goes on, content makers are realizing that not everyone is interested in keeping their Bittorrent client up to date and remembering to sort their search results by number of seeders, and that many of those people will pay money to NOT understand what the $&#* I just wrote.
What fascinates me, though, is the fallout I've seen on the consumer side. Just as the loss of physicality scared publishers, it scares a lot of consumers too. They don't trust the legal purchasing of digital content yet.
Now, as I sit mere feet away from a bag that contains my mp3 player, a electronic book reader that has built-in access to Amazon's e-book store, and a Nintendo DS that I'll soon trade in toward the new model that has downloadable game capability, I must admit that I'm not, erm . . . wassat called . . . eh . . . unbiased. I freely admit that I see the physical nature of media to be nothing but a quaint inconvenience.*
But just look at the two most common arguments against Digital Distribution, the ones I always hear when I talk to people about it:
"I don't like buying a digital copy because I don't feel like I really own the game."
"I like buying the box copy because I can hold it in my hand."
Isn't this strange? I mean, the whole idea is that the movie on the DVD, the words on the page, the music encoded onto the CD, THAT is what's valuable. But now that they're given a way to receive just the content itself, we find out that they view the physical elements as the valuable part.
And these are people who keep spindles of CD's and DVD's right next to their printer. They KNOW those things aren't so valuable.
It's like people are mad because a digital copy means the publisher didn't have to do as much work.
*Also I am super-lazy, and I can download things without getting up.