I'm going to make this a double-response for both of your comments, just to keep things simple. ;)
You're not off-base at all, though I do agree that our viewpoints seem to diverge.
As you said, were the iPod not dominant, it would indeed have been a VERY bad business decision on Apple's part. That said, if the plaintiffs want to assert that they were harmed by Apple's anticompetitive behavior, they need to demonstrate that Apple's anticompetitive behavior made it impossible/difficult for them to find music for their devices, which simply wasn't the case at all. There was zero friction preventing them from using any one of the innumerable competing services that provided them with the product they wanted.
As far as your analogy goes, if I understand it correctly (cars=MP3 players, nozzles=file formats, gas stations=music retailers, GM=Apple), I rather like it, but it helps to highlight why our viewpoints may differ, since I feel that your analogy has one critical flaw: it states that the new cars are exclusively using the proprietary nozzle (which necessarily comes at the expense of compatibility with the standard one), but that isn't an accurate representation of what was going on with the iPod. Had it been true, I'd agree with your viewpoint entirely.
Since iPods have from day one been fully compatible with standard, non-DRM'd file formats, such as MP3, WAV, AIFF, and AAC, it stands to reason that the new GM cars wouldn't be restricted to using GM's proprietary nozzle, as your analogy suggests, but rather that they would support the proprietary nozzle in addition to all of the standard ones already out there. As such, existing gas stations wouldn't want to replace their standard nozzles with the proprietary one even if it weren't patent-encumbered, since it'd mean switching from a nozzle that worked with 100% of cars to one that only worked with GM cars. Similarly, Ford owners would still be just as capable of getting gas as they had always been, since the existing infrastructure would continue to work just fine, and that would remain true even if GM cars controlled a massive share of the car market. GM cars having compatibility with a proprietary nozzle is in no way a threat to anyone unless the supply side of the market (gas stations) is also dominated by GM, hence my focus on retail music market numbers.
So, regarding that topic and to extend your analogy a bit, if GM opened up gas stations around the country that exclusively used their own nozzle (perhaps because they wanted to gain a competitive advantage by providing additional value to their customers), it may steal some business from the existing gas stations, but it wouldn't become a problem for Ford until GM's stations ran the other gas stations out of business, since up until that point Ford's customers would be fully capable of buying gas the same as they always have. But for that to happen, the GM gas stations would have to have a dominant market position, and 15-20% could hardly be called dominant.
All of which is to say, while it's true that Apple was only able to have a profitable music store because the iPod had a dominant market position, being profitable is not the same as being anticompetitive. So long as the iPod's compatibility with Apple's FairPlay didn't come at the expense of compatibility with other formats, people using other MP3 players would have been fully capable of going to one of the competing store and purchasing from there, rather than knowingly purchasing an incompatible file from the iTunes Music Store.
