This IS a fun game
And you are proving my point; the general demand is rarely for better quality/lower price alone - but rather for a lot of other reasons, amongst which convenience is one of the major factors of our time.
1. Most people finds the Windows system quite adequate, and the convenience (i.e. the compatibility with others, availability of resellers and lower priced systems) is a major factor of preference. As for quality the Mac system is undoubtedly better (even from a objective pow) - but appears to be more expensive (mainly because you get more built in features imo). Conclusion: People generally does not demand highest quality, but goes for the mainstream alternative - even though it really has lots of restrictions - it just doesn't appear so (MS software is generally the least compatible with others - it's just so dominating).
2. Most people prefers the "braindead" music like Britney Spears over the more complex (not only Classical, but even complex and quality rock/pop music: i.e. Yes, Pink Floyd, the Who - or even Jazz) out of convenience. It is easier to relate to - hence easier "available" to the main public. Even though you probably pay more for the new Britney album than a legacy Floyd recording - and the quality of the music and recording is doubtlessly in the latters favor - people actually buy the Britney album, well knowingly they probably "throw it away" in a couple of years. Conclusion: generally people "don't care" for quality and price; they want convenient fun right now.
3. Most people buy McDonalds out of convenience (I am not taking a debate of fast food preferences since the point applies to the industry. That said, Burger King will always rule
). The food generally tastes ok - and the same wherever you go in the world - i.e. it is always "safe harbour" - no worries. It is not particularly cheap, and not particularly tasty or healthy - but it IS convenient. So the conclusion: generally people prefer the convenience over quality and price - and what is good for them.
Overall conclusion - and why iTMS WILL be a success even with the restrictions imposed given the DRM:
Most people find it convenient to use, since you 1) buy only the tracks you want, 2) get it on your computer right now, 3) can easily transfer it to any of five computers (which is more than enough for most of us) or share over a network, 4) can easily use the songs on the worlds favourite mp3 player, 5) can easily burn favourite songs on CDs to friends (I mean to use in your car), 6) get acceptable quality (at least over downloading via P2P).
For most people; the quality is good enough, the DRM imposes no limitations whatsoever and iTunes offer the most convenient user experience ever. There is currently no reason why the iTMS should dramatically change its DRM (or other features) other than continue to develope the user experience and back catalogue.
As goes for the original argument that the DRM is too restrictive for some peoples needs - I accept that. But those people are in minority (like the Hi-Fi freaks), and they still have the option to buy CDs. There will always be some tough choices, and to twist your argument a little (to make it more viable in my opinion): Would you be willing to pay, let's say $1.50/track for an uncompressed, non DRM alternative over $0.99 for the regular iTMS available today? (figures just for illustration purposes - point: will people pay more for better quality over convenience (being smaller filesize) - given the choice).
