[crayz]

Would Apple actually store individual copies of each song, or would they use compression at some level so that if two users uploaded an identical MP3 rip of a song, it would "compress" down to only one copy on their servers?

Would it even be legal to swap one MP3 rip of a song for another(e.g. "upgrade" everyone to the 320kbps iTunes rip), assuming the source material was the same?

[physcab]

I assume this strategy works because they would be functioning as a Dropbox-like service where they just supply the hard-drive space in the cloud. Since space is pretty cheap (and Apple has a ton of cash anyways), it seems like the perfect glue that can connect all of Apple's offline products.

[johns]

The way Lala currently works is that it matches songs you have in your library with their cloud library and only uploads and stores your copy if there's no match. I don't know if Apple would continue doing it that way but that's how it works now.