Apparently someone at Apple made a comment about how iTunes would close if it couldn't make a profit, citing royalty hikes to be a potential culprit for causing that scenario.

I would actually look forward to iTunes folding up.  I buy my music elsewhere since I like to be able to listen to it on whatever device I choose (buy a music CD for $15, rip all the songs to my computer, have a hard copy and a digital copy with no DRM for roughly the same cost).  DRM is a punishment for legitimate customers and a minor hinderance for pirates.  If you're going to download music illegally you're not going through iTunes to do it--and it's a pretty safe bet that if you're paying for your music through iTunes you're not going to turn around and give it to everyone for free.

Another problem with DRM music is that you can't just stick the song on your phone as a ringtone if that's your intention.  Ringtone companies make their money by having you download MP3 songs directly to your phone.  A lot of companies right now are changing their message from "download ringtones" to "download MP3s to your phone" since it has a wider appeal and works well with the growing number of users that can listen to their cell phone mp3s through headphones.

So how can Apple and other companies like it get away with locking the system up?  First is that they conquered the MP3 player market, and iTunes downloaded songs are easily synchronized to an iPod.  Now they see the landscape changing and they started to penetrate the "all in one" device market with the iPhone.  They have a good base of users that can take advantage of iTunes.

But what about the rest of us?  What about the non-Mac fanboys (most of the country)?  Well, simply, DRM stripping programs and techniques are fairly common (like burning an audio CD of the songs you want to strip, then rip them back to your hard drive), so the lock that Apple places on their software is a low hurdle for anyone with enough knowledge to remove it.  If you went with something other than an iPod or iPhone there's a decent chance you aren't the victim of Apple's marketing department (read: mac user; noun - someone that believes paying more for hardware that comes with an OS that supports far fewer software options is better).  You are likely one of the people that takes the previously worthless data sitting on that sector of your hard drive and turns into something useful.

But there are iTunes users out there that aren't knowledge and don't have iPhones (which, by the way, can't easliy use your iTunes downloaded songs as ringtones due to DRM).  The good news is that you can now buy some DRM-free music from iTunes... but you have to pay more.  Apple has quite a business.  Pay more for the same song so that you can actually use it on any device you want. Awesome.

Most people don't want to break the law, and most people understand that stealing music is wrong, but legitimate customers want to be treated like customers and not criminals.  DRM is an insult to customers, and I'm shocked that people stand for it.  Like I said, I don't buy from iTunes and I likely never will until they start to show some respect to the people that use their service.