Ok, it is expensive but judging by the success in the US, it's not going to put people off.
The "MP3 generation" aren't really fused either about sound quality (within reason) or having a physical item. They also tend to buy individual tracks and make playlists instead of whole albums so they may well view it as cost effective.
Most £1.99 CD singles with "4 tracks" on them often really only have one track. I've seen them with:
1. Song (radio edit - clean)
2. Song (radio edit - uncensored)
3. Song (album version - clean)
4. Song (album version - uncensored)
If you think 79p is expensive, just take a look at what kids are paying for polyphonic ring tones

. It can be as much as £2.50 for a 30 second (if that), badly done, instrumental and barely recognizable snippet of a song.
Michael.