Tom,
I agree in the case of remote duplication of CDs and have seen this around 10 years ago. But copying songs to an iPhone, iPod, or mp3 player is a different thing. I've heard of some instances where people were planning on having stations at concerts where you could get a copy of the concert on your iPhone/iPod directly after. Much easier, cheaper, and quicker than burning CDs. Being able to play from a server is instantaneous.
Cheap and easy always win with consumers.