In the interest of maintaining simplicity for users (and tight control over the labels and studios), Jobs mandates certain prices for content. In doing so and not allowing prices to adjust for demand, Jobs essentially recreates distribution scarcity online. For example, if I’m looking to gain distribution for a new show, I might price it inexpensively or (gasp) free to attract growth. As that video or series becomes more popular I can charge more for it. By eliminating this price graduation in iTunes, Jobs commoditizes all content and assigns equal value to it. It has the same effect as limiting shelf space, even though no shelves actually exist.
This is another reason why Apple’s strategy is going to follow AOLs growth trajectory. Simplicity wins at first, but as your customer base becomes more sophisticated, choice becomes more important that simplicity.