This is yet another example of how the panopoly of tax exemptions creates more harm than good. A simplified tax system will allow people to operate their businesses in a stable manner without worrying about protectionism being induced by special interest groups.
The High Street Music Stores only have themselves to blame. They have singularly failed to capitalise on their market advantage. Where Amazon et al can maintain massive inventories in warehouses, but the consumer still takes a risk on a purchase, the HSMSs could have pursued "try before you buy" models that would allow consumer certainty. However, by piling the latest chart trash into rack upon rack, they have neglected the opportunity of bricks-and-mortar to provide value-add to clients. They've taken on the distribution warehouses at their own game and have - by & large - lost.
If you look at successful retailers competing against the internet you see time and time again that customer service wins, especially if it is coupled with risk mitigation. Allowing a customer first hand experience of a product adds value to them, for which they will pay. Sure, for many customers, price remains the only consideration, but that is because they have not appraised or have devalued the risk element of an untried purchase.
While their businesses are under threat from internet retailers, you do see that camera and hifi shops are able to build sustainable businesses charging 20% more than the internet for the same thing.
At a lower price level, clothes retailers offer similar value to customers.