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"If someone came up with an online music store, sold DRM free music with a library comparable to iTunes, make it really integrated and work with any music player including iPods"
That's the problem - Apple intentionally design the iPod to make it as difficult as possible for any software other than iTunes to work with it. They ship firmware updates with code specifically designed for no purpose other than to stop third party apps working with iPods. (Why do you think it's so much pain to get a recent gen iPod to sync with Linux?)