Are you talking about the retailer's income or the developer's income? Because while online sales might harm sales through independant shops, they do benefit the developers by reducing the cost of distribution.
I personally hate paying for software and simply downloading it and getting a key in my e-mail. Maybe I'm just too materialistic, I dunno... I have a registered copy of Alcohol 120% for Windows which I purchased this way, and sat amongst my other software it looks so much like pirate software, I don't feel like I really bought anything 'cause there's no box or anything...
