My Comments:
Nice idea, but for this to work the Federal Government would somehow have to force iTunes USA to accept payments from non-USA credit cards. This is out of their jurisdiction, so this will never happen unless they strike some sort of agreement with the US Government to pass such a law.

What I find hard to understand is why the record companies (well the majors in particular) ever desired to go down the path of maintaining territories. I can only ponder that it comes from the dinosaurs at the top who are fixed in that mindset. Territories make good sense when you are dealing with distribution of physical goods, but with the borderless internet they could have achieved tremendous efficiencies by having a single point of downloads for the whole world. Having geographically dispersed retailers is unecessary and really makes no sense when it comes to digital downloads. This would be very anti-competition of course, but they had the opportunity of being the sole download outlet for their own releases where they were free to set their own prices and policies (according to the variable pricing model they want Apple to adopt, for example). They had the opportunity of not needing any retailer taking a cut of the revenue. The only task needed is to have a local promotional presence in each territory.

Instead we find ourselves with this curious beast of a proliferation of download retailers, for whom the work of uploading files, maintaining databases, DRM encoding tracks etc.etc. has to be repeated for each one, incurring unecessary duplicated costs every time. Aggregators have begun to emerge to help reduce some of this duplication and work for the owners of tracks, but then a further cut of the revenue is gobbled up and presumably the portion flowing back to the artists is reduced.

The operation of the Internet was supposed reduce the cartel powers of record companies, which have long disadvantaged consumers. It was supposed to create a democratic environment, thereby delivering cheaper music and a wider range of repertoire to consumers.

End Quote:

It has reduced the power of the cartels. Let them continue to restrict those who are willing to buy overpriced downloads, because there is another choice. For the minimum risk of being selected for extortion, one can now get the music that he or she was not allowed to pay for or had to pay an excessive amount for, from the Internet at no cost. It has also turned the cash cow consumers back into customers. The customer is the boss, not the cartels, and the sooner they realize this, the sooner they can go back to business.