While that's certainly true I think there's two additional points that need to be mentioned:
1) Geek's view of reasonable pricing tends to be somewhat unrealistic. Look at the fuss recently over Netflix raising prices, you'd think they were demanding you gave your kids college fund over rather than $6 a month. Now the content owners tend to go in the other direction but as much as I hate to say this (being a consumer and wanting the lowest prices possible) but I have a suspicion the content owners are closer to the balancing point than the geeks at this point.
2) Google didn't bother even talking to the content providers and that's a systematic problem with their various projects. Put simply Google has a long history of ignoring copyright and content ownership and in this case it came back to bite their customers hard.
Ultimately whatever the future of TV / Internet Video it's only going to happen when the various parties sit down and work out a deal that's acceptable to consumers AND allows content producers to make a profit.
SUV's have high profit margins and people are willing to pay it
gasoline has low profit margins yet people think they are being ripped off
cable companies are pretty low on the profit margin scale
content owners have decent margins
yet people think oil companies are evil along with cable companies when most of the money is made by the others in the chain. sometimes life is not fair