I spend hours every week finding new bands to try out from genre sites and music blogs. The bands I like invariably put their stuff out to stream for free so you can try before you buy (usually from Bandcamp or Sound Cloud). If I like their stuff I buy it on vinyl or tape, and with that I get a FLAC download which I can stick on my phone.
And I think that's what their market research has failed to grasp - if you're going to buy a digital release, why would you need a physical medium for it? People buy physical releases nowadays because they want an emotional connection to it: vinyl sleeves have a particular smell that changes over time, the 'ritual' of wiping dust off a side and carefully aiming the needle, etc. CDs, DVDs, SACDs, BluRay, etc. have none of these qualities which is why no-one is interested in them anymore.
I take music playback seriously and I actually work in digital pro-audio, so before anyone spouts something about the old analogue formats' deficiencies, here's a John Peel quote:
"Somebody was trying to tell me that CDs are better than vinyl because they don't have any surface noise. I said, "Listen, mate, *life* has surface noise.""