I think the funny thing about this and similar issues like the Universal music contract and the DRM-free stuff, is that the motivation behind it all is supposedly that these other companies are worried about Apple becoming a monopoly.
But normally, when people worry about a company becoming a monopoly, the concern is that they will start charging more money, etc. These companies are worried about Apple because they are using the popularity of iTunes and iPods to stick to their guns to NOT charge as much money as these content companies want.
Aside from that, it seems like this is the only option left to them. No-one else seems to be able to compete with Apple head-on (i.e. by offering a music service/video service and hardware that is really compelling), so the only option left is to try and harm Apple by simply taking their content away.
It's a bad call though. I think they must hope/assume that maybe everyone is going to rush out and buy Zunes now or something to be able to keep buying their content, at whatever ridiculous prices they want to charge, but it's more likely that people will keep their iPods and come up with other ways to get the content.
