We've heard a lot of rumors about a cloud-based iTunes service, and apparently Apple is working on exactly that, but the company has reportedly told a few music label executives that any service that debuts will be only "modest in scope." CNET says that Apple's strategy isn't exactly clear -- apparently Apple doesn't have the agreements it needs with music companies to actually distribute music from the cloud, but Apple has instead put streaming service Lala (which it acquired late last year) to work on video streaming, not music. Of course, this is all second- and third-hand, and Apple has yet to officially comment on the matter, but it sounds like Apple is working on something more like YouTube or Hulu than a music streaming service. The cloud-based deal would consist of "digital shelves," where users could store videos or other media, rather than a full music library.
Interesting. There's no question that a cloud-based music database would be extremely popular, and indeed Google is already working on just that, supposedly. Engadget notes that the iPhone 4 launched with the same memory capacities as the 3GS -- perhaps memory isn't such an issue when you can store your movies in the cloud? It seems like Apple's past relationships with the record companies are making the road a little bumpy, so the first official word we see of the iTunes cloud may have nothing to do with distributed music whatsoever.