Maybe I'm just missing something, but I like having the media for which I purchase the right to consume on my own local device(s). There are times when we are not connected to the Internet. Even if we were through AT&T on the 3G network, the experience will not be as seamless as if the media was locally stored. I was just in New York City and was appalled by how bad the 3G network is there. I thought it was bad in Philadelphia and everyone was exaggerating in New York. But, I could not make one call without it being dropped. And forget about wireless data. I just don't believe the networks can handle that much data being transferred. Can you imagine trying to stream your music on a crowded 9 train or a PATH train? I just don't see it.
Of course, don't even get me started on data being erased. Just ask all the sidekick users that lost their data when the servers crashed. Wait until the servers are down and tell me how much you love having your data stored in the cloud.
Sorry, I just like having the media stored locally. If they keep this option, I guess no harm, no foul. Otherwise, I just don't get it.
If it works like
Spotify does, then I think most of your concerns will be moot. I use Spotify more than iTunes (on the desktop) or the iPod app now. One of the key things with the service is that instead of requiring users to pay for what they already have, they pay for (ad free) access to all the music they *don't*. If you don't want to pay, you can get a limited access with ads on the desktop. The cost isn't exorbitant however even with the premium accounts.
Spotify also caches locally (either explicitly, with you able to pick playlists you want available offline, or a small cache from the songs you have played lately) so I can still listen to music when I'm out of signal. It works over EDGE as well as 3G networks, dynamically scaling bandwidth meaning that it is rare I am out of signal (generally only on the train or tube, when I'm in London).
Finally, it allows me to share my music with my friends. If I hear a track I like, perhaps found using 'related artists' or 'artist radio', I can throw it to a friend. They send me music in return, and we all learn about more sorts of music.
The whole 'owning' things like music always sounds strange to me. As far as I'm aware you've never owned the music; at most you've owned the medium with a licence to use the content. Now, with electronic copies, does it make sense to say you own anything at all? It feels just as confused as many accuse copyright holders of being, confusing physical and intellectual property. The Spotify service sidesteps this, of course, because if you pay for it then you're not paying for any particular track. You're paying for access to a huge library of tracks all at once.