There is a very clear reason that this whole thing is bad. The iPod remains the dominant player because of one thing: the user experince. This is everything from buying songs on iTMS to transferring them to the player, to listening to them. Apple's control over this experience, the reason they are a vertically integrated company, is why it is so seamless. Just like why the experience using OS X on a mac is so differenth than a windows box.
If Apple were to license Fairplay DRM, then iPod users could buy from many stores, but apple has no control over these stores. They could use lower bitrates, which would annoy some customers. They could just have a clunky, frustrating environment. They could even have problems where people buy songs, then the download doesn't work. This causes bumps in the iPod experience. What if someone in another store makes a mistake and breaks iPod compatibility. Customers start calling apple tech support. Apple can do nothing about this because it isn't their own product. The customer then gets mad and thinks Apple tech support is horrible! "why is my iPod such a POS?" they ask. Then they look for an alternative in their next digital music player.
By forcing open Apple's DRM scheme, real has made this situation even stickier for apple than in the above scenario. Apple has the choice to break their little haxie, but then the customers get confused and wonder why songs they thought should work won't. Apple's tech support gets a headache. If apple chooses not to break the haxie then we enter something like the above scenario, and another nightmare.
Apple is stuck between a rock and a hard place.
Here's hoping Apple comes up with a creative solution to this debacle that solves everything. Or that they can nick harmony completely before any damage is done.
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