While I haven't bought a physical CD in about 7-8 years, I still see that the major online music retailers (iTunes) still falls short in the music that they sell in the area of audio quality.
In general, most of the music that is sold on iTunes is fairly low audio quality. For listening on an iPod with ear buds it's more than adequate but I really didn't notice how bad most of the music was until I attached my iPod to my home stereo. The audio quality becomes much more apparent and I had myself wishing for the original CD for many songs.
While I agree with the Gartner report that the music industry must move to a "digital first" strategy, they also need to address the audio quality issue as well and sell a product that is at least as good as CD audio.