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You buy music to show support if you can't make it to a concert.

You buy music because Youtube usually has horrible sound quality.

You buy music because you want to listen to your music on your iPod or preferred MP3 player.

You buy music because you want to hear your music as it's released, and not wait for someone to upload it on Youtube in 3 days.

You buy music because you have obscure songs that don't exist on Youtube.

You buy music because you'd rather have local files in case you have no Internet.

You buy music because you have a superior alternative to Youtube, as in playlist management, Replay Gain, and more.

I'm not an audiophile, but is there a significant difference in quality between an MP3 file and a 720P youtube video?

Streaming 256kps would seem fairly trivial on even a mobile connection these days.

I know I can use spotify on my phone over 3G at 192kps.

It would also just seem to be a question of "when" before somebody releases a really good music player application that just uses youtube as a backend.

No, but many, many YouTube videos that are songs (either music videos or slideshow + song) have been re-uploaded and/or re-encoded many times, so often they don't have a high quality option, or if they do you're watching a 360p re-encoded in 720p. If you've ever listened to a song on YouTube that sounded like it was being played underwater, that's what happened to it!

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