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fuck that.
put a single music album on a micro SD card in FLAC, incorporate a proprietary file-system that hasn't been reverse engineered yet.
Oh wait, non of apple's mobile products support any kind of removable storage (ipod, ipad, etc).
Still, IMO it'd be a good way to do it. make a box with a crap ton of microSD slots, give it wifi, RCA jacks, streaming capability, and a web based interface.
Sell albums as SD cards that you can plug in, give each one a tiny album cover to distinguish them from each other.
Make an app for it. Set up a corporate server to hold data, and stream the stored media to remote devices (so nubs don't have to set up their own).
Proprietary file system and binaries should help to reduce the ability to pirate the digital media, and can be sold at normal stores. Also would increase dependence on your company product, which is the only one that will support it.