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Step 1: iTunes: Store all music locally.

Step 2: iCloud: Store music remotely (increased convenience).

Step 3: Patent: Store bits of music locally (better performance).

Step 4: Store all music locally (best performance). Refresh from cloud only when necessary (convenience).
 
I'm now patenting a thing called "sniffling" - where small snippets of mucous are stored in my nasal cavity as I wait for a kleenex. :D
 
OK, so I skimmed the actual patent.

The patent holders themselves use the word caching and that is indeed what they do. The "invention" is that the metadata in the user's iTunes library tells us what files are stored remotely, so we can cache a bit of the songs so it begins immediately when a user listens to a song for the first time via the streaming service.

Another way would be to just keep a bit of the song when we upload so no initial streaming is necessary. I don't believe this method is covered by the patent. Maybe I should patent it? It's about as inventive. That is, not at all.
 
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Without reading the patent application, this seems like quite a good idea for two reasons.

1. Hopefully interruption-free playback of music
2. Reducing bandwidth use at Apple's end caused by all those people (like me) who listen to the first few seconds of a track then skip to the next. That kind of data usage would probably be significant at the scale of users we're talking about.

I wonder what device(s) they're planning on using this in.

EDIT: I was right (I should've read the patent first!).

In particular, an electronic device can have a limited amount of available storage, which may be exceeded by the user's media library. The user may then be prevented from storing the entire library on the electronic device. This may force the user to select only a subset of the library, and may in turn cause the user to rarely listen to or forget about media items of the user's media library.

Similarly, streaming media can have limitations. In particular, the electronic device can require an active communications path with a content source. In addition, the electronic device may not begin playback until at least the beginning of the media items has been cached. When the electronic device is unaware of the next media item to play back, the electronic device can require undesired pauses between media items. Similarly, when a user skips to a different media item for playback, the electronic device can require a pause during which no media item is played back as the new media item is streamed to the device. This may limit the user's ability to enjoy the user's media library and the user's electronic device.
 
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