Apple Mulls Flat-Rate "Unlimited Music" Option
It looks like Ars is misinterpreting the reports. What I've read is that Apple is offering $20/device to the music artists/labels - divided up based on actual downloads. Their research says consumers will buy this ability at up to +$100 per device. So, I'd expect the cost to be between $20 and $100 (maybe costing more or less based on the capacity of the device - $25 for a shuffle, $100 for an iPhone? [Assuming the Classic iPod will be discontinued at some point here...])
In this scenario it's justifiable for Apple ask for more of the revenue for themselves because they're assuming years worth of bandwidth obligations.
This would be attractive for the labels because it would be about 30% more revenue than they're getting now from iTunes on a per-device basis, but it's unattractive because it creates a supply glut that virtually guarantees dramatically reduced sales in the other sales channels. (Though, piracy likewise produces a supply glut so maybe they're ready to make peace with an environment awash in easy to acquire music.)