Since a post by a certain Mr. Jobs last week, a lot has been written about the music industry and where it is going. Some of it I agree with (especially Fred over at AVC) but most of it is nonsense. Apple is not the good guy in this situation. There are NO good guys, except the musicians, and sometimes I have serious reservations about some of them.
Apple have taken advantage of (yet more) lack of foresight by the music labels to gain the monopoly in mp3 players and the mp3 sales industry. Steve Jobs has absolutely no interest in removing DRM from iTunes, and why should he? Everyone knows that Apple makes almost no money from iTMS, and a lot of money from iPod sales. None of this is new.
As has been said before, Apple would sell more songs from removing DRM, resulting in slightly increased profits, but would have to rely on customer loyalty to ensure that they kept selling iPods. Personally, I think that the people who buy iPods probably fall into one of two categories - iPod fanboys who would never think of buying anything else, and people who don't realise there are other options out there. The people who fall outside these groups are probably so small as to be insignificant. Therefore I don't actually think Apple would lose out too much in the short term by removing DRM.
The problem will come with mobile phones increasing capacity enough to store music to rival the iPod. Hence the iPhone. If Apple opens up FairPlay, the opposition will not be other mp3 players - people don't buy them. The opposition will be the mobile phones that people will already own. Instead of having to think about which mp3 player they buy, customers will begin to realise that their phone can already do it - iPods become a thing of the past.
I personally think that the European nations will force Jobs' hand. If the UK became involved that would happen even quicker. I don't think this will result in the crumbling of the Apple empire, but I do think Nokia, Motorola and the other handset manufacturers will be the major competitors in the coming year, not Microsoft's Zune or iRiver, Creative, etc.