I agree with you in principle, but in fact, Microsoft did do a deal with Napster, and Napster still exists, now as a legal source of music:
http://www.napster.com
They work on a flat monthly fee model for unlimited downloads. Decent range of music, too. I don't know what their DRM model is like for downloaded tracks-- I'm not a subscriber and there weren't any restrictions described on their website that I could find.