And what if half of your music is from torrents????
Then you're <beeped>. I have caught myself DLing a torrent of a CD I have but don't want to dig through my box of CDs in the basement to rip to iTunes. Kind of a shame it's so easy to DL music whether you own it or not.
This has been covered a number of times and here is the latest link I could find via Google. Part of the subscription fee is used as a licensing fee for songs where you have not already purchased a license (meaning you didn't somehow already pay for it).