On the surface $25/year seems too low to cover a music subscription service but there are about 140 million iOS devices out there and probably 50 million Macs? If 50% of them were to signup for iCloud and pay $25/year with 70% going to the labels/publishers they would make about $1.7 billion dollars. The entire digital music market was $2.2B in 2010. It's definitely in the ballpark to replace existing iTunes music sales. Apple may have sold the labels/publishers on the idea that a low cost service that gives people what they really want, unlimited access to endless amounts of music, is viable if it's priced low enough. It would probably turn a lot of career pirates into paying customers.
You're probably mostly double counting, unless that's $25/year/device - mac users generally have iOS devices and may well have multiple iOS gadgets accumulated over the years. (There are a lot of iPhone users who don't use a mac, but not the other way around.)