I agree, but I also don't think it would be impossible for Apple to have their own hulu/netflix like service, after all, you can already buy some videos through itunes.

I think this will only be bad for users, but not bad enough to force masses of people to leave. There will always be a cost to leaving Apple behind (both psychological and monetary), and if Apple had to invent their own services to replace those that left, I think they would be more expensive and maybe not quite as good as other products, but they wouldn't be so bad as to force people to leave their iphone, which still has many fun/useful features that don't have subscriptions.

I think the only businesses that are in danger of leaving the apple system would be: Music streaming, video streaming, and books, and I think Apple would be able to provide their own in house replacements for those that left (for better or for worse).

In Apple's mind, iTunes and iBooks are competing services to Neflix, Hulu, Rhapsody, B&N eReader, Kindle eReader, except that iTunes and iBooks have less features or less content or worse experience or no streaming. They are all ways of providing access to view/read/listen to digital media from content producers. Right now, you may not view iTunes and iBooks as competing services because both are available on the same platform and provide different ways of accessing digital media.

Apple currently has to allow these competing services to be made available through their platform, either to make the platform more appealing to end consumers or because of worries of anti-monopolistic concerns or because Apple isn't comfortable with denying these.

iTunes most certainly does compete with Netflix and Hulu especially, and iBooks is obviously there to compete directly with other ebook providers.

I agree that both iTunes and iBooks are rather horrible products, though.