Joel hits paydirt on the rationale for variable pricing of music - it allows the industry to maintain control:

Theoretically, when a super-duper-blockbuster comes out, like, say, Lord of the Rings, there's so much demand that the movie theaters just end up turning people away. Econ 101 says that they should raise the price on these ultra-popular movies. As long as the movie is sold out, why not jack up the price and make more money?

And why don't they do that? Joel explains that the price sends a signal - if a movie came out with a lower price on first run, it's a massive, public "Thumbs down" on the movie - the likely result would be fewer viewers, not more based on lower price. How does that relate to music?

Now, the reason the music recording industry wants different prices has nothing to do with making a premium on the best songs. What they really want is a system they can manipulate to send signals about what songs are worth, and thus what songs you should buy. I assure you that when really bad songs come out, as long as they're new and the recording industry wants to promote those songs, they'll charge the full $2.49 or whatever it is to send a fake signal that the songs are better than they really are. It's the same reason we've had to put up with crappy radio for the last few decades: the music industry promotes what they want to promote, whether it's good or bad, and the main reason they want to promote something is because that's a bargaining chip they can use in their negotiations with artists.

The upshot - they can hold a gun to the head of artists, threatening them with the lower price. Instead of what happens at the box office - and on the iTunes interface - the industry can continue to promote the artists they want that way, and ditch the ones they don't want. The iTunes system gives end customers much more power over the system - and enables the artists to more reliably gauge their actual worth. As Joel says, that's the last thing the industry wants.