1) Broadband penetration has to really take off or even get an upgrade. Lossless files are so much larger than regular ones, so the speed thing has to be in place. Otherwise, the hoi polloi won't adopt something that isn't as "one click" fast as iTunes currently is. After all, who wants to wait 2 hours for an album transfer on iTunes when you can get one for 5 minutes on iTunes currently?
2) iPods and other music players are going to have to be upgraded to actually take advantage of lossless files and headphone technology is going to have to become cheaper and more accessible (and not such a niche market). Why go further than 256K m4a if you are using $15 Target headphones on an iPod shuffle? That is just a waste of space!