The recording industry would be fools not to take this. $20 x 40million iPods/yr is $800 million a year. Just can't pass that up.
But who gets the $800 million? The record industry is not a single entity.
I listen to a lot of independent music. They aren't part of the major labels. If they don't agree to such an agreement with Apple (and I can't imagine absolutely 100% of musicians will) then Apple has a fragmented system, just like they do now with iTunes Plus.
In this hypothetical example, I as a consumer end up paying more when I buy my iPod, but would get no benefit. The artists I want are not part of the plan, but I am essentially giving money to record labels I don't like.
That doesn't sound too good to me. Let me pay for the iPod, and the iPod alone.