In March 1993, the International Federation of Phonographic Industries issued Music Industry, Electronic Delivery and Copyright, a report which is quoted as stating that "it would be contrary to all logical expectation if electronic delivery did not substantially supplement, if not replace, the existing retail systems for marketing phonograms".[12]

Two months later, IBM and Blockbuster proposed the first commercial system to realise the concept of digital music delivery. The scheme was to take the form of in-store manufacturing kiosks at Blockbuster's retail outlets - the company would store and transfer music files which could be written to CD on customer demand. The artwork and packaging could also be designed and assembled at the store. The intention was to streamline the process of music retailing for Blockbuster by decreasing the volume of stock warehoused and distributed, and by easing stocktaking problems.

Since the musical product would be distributed to the retailer via computer network directly into the company's sound file storage space, there would be little need for traditional distribution channels. The largest record companies, who also owned the largest distribution networks, objected to what they saw as a threat to their existence and refused to support the project by refusing to supply music should the project go ahead as planned. Since major labels represented 85% of total music sales at the time, this was a major blow to the development of the project, and to the concept of the electronic delivery of music in general. [13]

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