People have said this software is illegal. That's true (at least in the US), but then in several places it's also illegal to cary wirecutters in your car. Not everything that violates a law is objectively wrong. And yes, piracy is fundamentally wrong. But circumventing copy protection is not (necessarily).
As for the practical impact, I don't think there is any. Until you can name a song on iTMS that you can't find on Kazaa (or LimeWire, or Acquisition or <insert other p2p software>), then there's no real impact. iTMS and it's DRM really don't do anything to keep songs from propagating over p2p, because the people who upload music on p2p networks are far more likely to obtain (unprotected) music over p2p networks (or CDs).
There is no damage whatsoever to iTMS or the music industry if somebody uploads a file to a p2p network that was already available on the same network. From a piracy perspective this software doesn't matter, because there are other, far easier and cheaper methods of pirating music, no matter how simple this software gets. The only place that this software is really useful is for people who want to pay for downloads and have flexibility. Because of the way p2p networks work, the amount of music piracy is driven by the number of downloaders, not uploaders, and therefore the presence or absence of DRM doesn't matter.
It's unlikely, given the other methods available, that pirates will use this software at all unless iTMS becomes ubiquitous and completely eliminates CDs, and even if pirates do use it, the impact on the availability of pirated music isn't really that great.
Meanwhile, there are benefits to iTMS users:
1) Music can be played on older computers (OS 9, Win 98/ME -- people do still use these, even if not as their primary computers)
2) Music can be played on non-iPod music players.
3) Music can be converted to mp3 to play in cheap players or burn to mp3 cd's
4) Windows users can now (like mac users have been able to all along) use their music files in movies, etc. -- iMovie supports AAC-p, but there is no windows movie software that does.
5) If, for some reason, people want to switch music software at some point in the future. Even if iTunes is the best jukebox software out there now (this has been disputed), odds are that it won't stay the best forever. This gives them the option to switch software in the future.
So yes, it's technically illegal. But overall:
--The impact on the music industry is basically nothing, because music can be pirated far more easily by other means
--The impact on the iTMS is net positive because it allows customers to get more value out of their products, while it's not likely to increase piracy.
So, all in all, it's a net positive for iTMS.
