Ironically, iPod & iTunes were using DRM (FairPlay) on launch!

I don't think it's DRM itself killing innovation but the overuse of the actual "control over software and hardware providers".

What makes products like the iPod or Netflix successful, despite their use of DRMs, is their simplicity and accessibility among other things. Netflix is trying hard to negotiate for more content, but I think content providers are killing innovation mainly by not allowing initiatives like Netflix to have all the content in one place. We need a Spotify (i.e. most of the content available) for movies...

Edit: elaborating...