Could be good news for the Android and Windows Phone 7 ecosystems. Seems like it'd be easy for most of these publishers and services to re-focus their mobile strategies on platforms that are more friendly to their business model.
But if end-users don't see any loss (e.g. Apple provides similar capabilities to Rhapsody, et al), then it won't matter. People won't leave the iPhone for another phone over this.
My prediction is that Apple will make sure it has similar capabilities.
I'm not sure "similar" capabilities will always be enough. If Apple succeeds in chasing off Amazon and B&N, then WP7 and Android phones will look much more attractive than iPhones to Kindle and Nook owners.
Netflix availability so far has been an advantage that iPhone/iPad has over Android, but that'll turn around completely quite quickly if Netflix get's chased off the IOS platform by Apple's 30% cut.
Let's get serious. iBooks and iTunes are good, but are they really going to be able to take on Pandora, Rhapsody, Last.fm, Amazon, B&N, Netflix, Hulu, etc. all at once?
By pissing off all the content providers at once Apple is basically gifting a huge chunk of the app ecosystem to Android and/or WP7.
You are absolutely correct. I've invested hundreds of dollars into the Kindle platform. If, suddenly, I can't access this content then I will go where the content is. Apple's platform is compelling because content providers have set up shop there. That's the synergy that Apple has seemingly ignored. I can go anywhere for $0.99 fart apps.
