The current generation of iPods maxes at 60GB, and a 100GB iPod by year's end seems more than likely. With such high capacity hard drives, song file size is quickly becoming an afterthought to most consumers. After all, who's really counting after 10,000 songs. So I'm surprised that Apple still hasn't become the first mainstream digital music store to offer lossless downloads, especially given their recent product announcements and the growing popularity of Apple Lossless format.
Apple is already a luxury brand. The recent announcement of Italian leather iPod cases from Apple, and Steve Job's comparison of Apple to brands like BMW, Mercedes and Porsche have only made this point abundantly clear. I would expect that Apple, being the marketing powerhouse that they are, would be able to represent lossless downloads as just another luxury item. Apple has already attempted to court audiophiles with the iPod Hi-Fi (unsuccessfully, I might add), and this could be another approach to reaching a customer niche that has largely remained on the sidelines of digital music.
However, it seems likely that customers who are eagerly waiting for lossless downloads on iTunes would also have a use for lower quality dups of the music as well. So what would really be fantastic is if with the purchases of a song in lossless format, an additional standard quality file was available for a discount. So that the lossless song may cost $1.25 and the standard quality file could be purchased for another $0.50. An upgrade option would be a welcome offering too. Customers who purchased a song at standard quality could purchase the lossless version at a discount.
Best of all some pricing scheme along these lines would fit well within the current DRM model. Seemingly anyone who purchase a lossless file may hope to be able to convert it to a lower quality as needed. By offering a cheap download at another quality level, Apple can avoid customers attempting to break their DRM.
Personally, I'll still be buying used CDs for the foreseeable future (as I have for about a decade). But for the occasional single pop song I decide I need to own, I'd be much more willing to shell out a bit more for a lossless file.