Well, it would be similar to the movie studios not wanting iTunes to allow for the ripping of DVDs lest they stop selling movies on iTunes. The two (DVD purchases and ITS content) seem to have nothing to do with each other, but to paranoid content provider they do.
Basically, the labels didn't want Apple to get clever and do something to circumvent the ringtone profit stream. Remember: the ITS deals were hammered before the iPhone was a glimmer in Jobs's eye: I'm sure he didn't care about ringtones back then.
Too true. That also annoys me, that I have to buy a DVD of a movie to play it on my TV then buy the exact same movie again (for a similar price) to play it in iTunes/my iPod/TV (via apple TV). Or it would if I lived in the US, but since I live in the UK I can't buy ANY movies or TV shows on the iTMS. Which renders most of Apple's products (video iPod, Apple TV and iPhone) largely useless.
Like I said, it's no wonder people pirate. Heck, in the UK it's the only way to get content on the Apple TV. Why bother selling it at all?