How the "value" of media is determined is so loopey that I just can't trust them to give me a fair price on their own -- so outside entity (in this case Apple) needs to be there to force them to be fair to consumers.

In theory, with efficient markets and informed rational consumers, it is the consumers (wielding the proverbial invisible hand) who determine the "fair value" of media. However, just as you don't trust the record companies to be fair to the consumer, I don't think you should trust Apple either.

For what it's worth, at least until this past Supreme Court session there was a blanket prohibition on companies requiring retail price floors for their product meaning it would be brazenly illegal for a record company to dictate retail prices to Apple or Amazon (or Rhapsody which has the same DRM-free mp3 options as Amazon). Apple has no such restrictrions on retail pricing unless they are determined to hold a monopoly.

As far as subscription services go, I think they are fantastic and way better than iTunes! You're not paying $X/month to rent a Fergie song. You're paying $X/month for access to their ENTIRE catalog. There are songs I've downloaded and put on my phone that I would never in a million years pay $0.99 to purchase. If I get tired of a song - I just start playing a different one without having to pay anything extra.

With Rhapsody I also have the option of purchasing the song ($0.89 ea.), some with WMDRM similar to FairPlay (3 computers instead of 5 - but can burn to a CD), some DRM free (as part of the deal that Amazon got in on). I've got 2GB of music on my phone and half of it is in the form of subscription tracks from Rhapsody. Their software is pretty buggy, though.

The reason Apple doesn't offer it is because the music industry would never have it. The fact that they allow Amazon to sell DRM-free but not Apple suggests that they are playing politics.

Either that or Apple wouldn't sell it under terms the music industry wanted. Amazon and Rhapsody are apparently willing to agree to the music industry terms AND sell them for less than iTunes. So is Amazon selling at a loss or Apple selling at an inflated price?

This is business, not politics beling played here.

Maybe Apple is taking too high a margin on music? Somehow I doubt it. The label gets 70% of that .99 and the rest is for Apple and the artist. I believe the artist gets .10 leaving Apple with .20. That money has to take care of bandwidth, store design, dealing with Fairplay code (which is a requirement of the labels).

Do you have any sources for that breakdown in price? If that breakdown is correct, should Apple really be getting twice the cut that the artists do? If they split 50/50 with the artits - bam you're at $0.89/track.

Also, Rhapsody was able to charge $0.89/track for the last 5 years or so with the same need to provide DRM. They have a revenue stream from the subscriptions, but that has to support the development and upkeep of the technical resources for the subscription services.

A lot of bashing has been going on based on Farhad saying that iTunes tracks cannot be played on players other than iPods and iPhones. Complaints revolve around the fact you can burn a cd and rip that to mp3s or you can use software to capture the audio stream to mp3s. Of course all these can be done with Windows Media DRM as well.

These claims of iTunes compatibility with non-Apple players are kindof like saying your word-processing documents are compatible with MS Word if you print them out, scan them back in and the use OCR to convert the image data back to text in Word. Could you do it, of course. Would you do it, probably not.

Really, how many iTunes customers have burned their iTunes collection to CD and ripped back to mp3 at something like double the file sizes? Even with DRM-free mp3s, I would probably try to convert them to a format with a more efficient compression scheme, which using iTunes would be AAC - and I'm back to using iPods and iPhones only. And how many iTunes customers are customers because they bought an iPod rather than the other way around?

If you are not actively trying to defeat the DRM, iTunes makes it painful to use a non-Apple audio player. The Windows Media Audio format is compatible with a wide range of players (the el-cheapo $20 players can't handle DRM or VBR or lossless wma files, but most reasonably priced players and the pocket pcs can handle those options), but not Apple hardware (without burning to CD, DRM stripping, etc.).

In the end it's driven by your hardware. If you have an iPod or iPhone iTunes is the most viable and pain-free option. If you have almost any other device, a service that uses wma is going to be more convenient.

Ideally, manufacturers would include both FairPlay and WMDRM capability and stores could offer downloads with either DRM scheme. Since MS has licensed WMDRM playback to many manufacturers, software developers, and music services I assume that Apple does not want to licence FairPlay to other manufacturers or obtain a license for WMDRM capability for the iPod/iPhone/iTunes architecture. This would be consistent with their approach to the PC market - hardware and OS only by Apple, no licensing to others.