This report is so on the money, so to speak. Yes, consumers should be charged significantly less for downloaded music. The only reason that the music industry continues to prop up the format for albums, via CDs, is to promote a hugely profitable format. It doesn't cost much more for a record label to produce an CD over a CD single, but the profits from that production are huge. The same was the case back when we were using vinyl releases - 7 inch singles versus albums. It hasn't changed, but rather just jumped formats.
Most pop albums are made with 1 or 2 songs that are geared towards single material. These are the tracks designed to hook the listener and get her to spend more money to buy the full length record - where the real profits are at. The label then completes the album with what it, and often the listener as well, considers filler material. The marketing and the money (via videos, commercials, web material, etc) all go into the single material. The rest is done cheaply, but the profit differences are huge.
Actually, selling downloaded songs harkens back to a bygone era of how records used to be made. Musicians used to record singles and release them for sales at a staggering rate. Albums were then produced when a large number of singles were out with a new song or two to fill out the material. The Beatles, for instance, used to release 2 or 3 albums per year in their early years based on singles that they had put out. Elvis, Little Richard, Johnny Cash, and many others did the same thing. That was the way that the recorded music industry worked from it's inception (all the way back to cylinders, which were nothing more than singles) until the 1970s.
In the 1970s, record companies discovered selling albums. They found that they could increase their profits through the sales of albums and changed their marketing paradigms. Albums became concept pieces or snapshots of the artist's work. As a result, fewer singles were released. Musicians found themselves on schedules. No longer could they just drop into a studio, record a song, and have it into the public's hands within a week or two. Now, they had to wait to record "the album", get the marketing in place, and wait for the release. The single would be released to lube the public, then the album would come out to fill the gaping hole of desire.
Selling online downloads takes us away from the marketing aberration that has been used over the last 30 years and brings us back to a time when the artist could feel free to produce whenever she wants and release material on her time scale. This is a good evolution to my mind and one that makes considerable sense in a pop music driven world. As I've said before, most musicians cannot put together a good concept or "album" piece anyhow so why pretend to honor the construct? Let the listeners decide whether or not to buy the filler.
However, the music industry is fighting this as they've become addicted to their marketing/revenue stream. They could increase sales significantly by lowering the prices of their downloads. Volume would compensate for lost revenue per song. Let's face it, for the true fan, the CD release will still offer added value. It has the booklet, it's on a professionally produced CD, it has better sound quality, and the company can add further value through packaging or special offers. But, to extend that value properly, lower the prices of the downloads and watch the volume soar. For that matter, let's have some competition on the pricing as well. I'll bet you'll win back those people who are cheating the system!