This is a throw away account, I would prefer to remain anonymous. I work for a digital music startup and am privy to the kinds of tactics and ridiculousness that the major labels engage in on a regular basis. I should note however that I am a developer, not one of the guys that do the deal cutting as primary focus.
For example; they're well aware DRM does not work, but their insistence on the implementation of DRM is absolutely not focused anymore on the idea that they can stop piracy, but that they can implement market segmentation and suck the profit out of the kind of content that people actually want.
Case in point; digital music startup that charges a subscription for global access to a large library of content from the major labels charges a flat fee to the customer and is charged by the record labels on a pay per play basis, thus the effective margin that the startup makes is a function of (average amount of plays per user / subscription cost per month) - price paid to record label for the play. It turns out that if you do not use DRM for your player the record label leaves you around a 10% per play margin (on quite a hefty monthly subscription fee). With DRM it's much much more profitable for the startup in question, they bank on DRM being so repellent to customers that the startup will pay the much higher rate for DRM free.
They also micromanage the hell out of the details of implementation, for example they have a specific set of "acceptable DRM" standards which you must adhere to to be eligible for the rates in question. There have been negotiations running for months with them just to get approval to run the same kind of streaming clients as the web service provides available as applications to android / iPhone clients. When considering implementing AWS for site infrastructure one of the objections raised by the music companies was that "they don't want their music on the cloud".
Effectively it chokes what it is possible to do in the market, inflates the prices, and makes the entire offering far less appealing. It does seem like they're headed for destruction but they seem just as steadfast in their refusal to amend their course.