Are internet sales taxable?

This is the question I was trying to figure out. My business is located in California and I expected I would at least have to collect sales tax from customers in CA (once I have a product to sell, that is). But when I went online to confirm this and to find out what the sales tax rate is exactly, I found a document on the California State Board of Equalization website that surprised me.

If you sell electronic goods, such as software or a database, that are distributed to customers over the internet (as I am planning to do), the sale is not subject to sales tax. If, however, your clients download the software, but you also send them a copy on CD, then the entire transaction is taxable (I take this to mean that you cannot just charge some nominal fee for the CD and tax that).

Here's the source document: http://www.boe.ca.gov/pdf/pub109.pdf