Update: Apparently what looked like a "stream" is really a simultaneous listen and download --- users can hear the song while their machine ingests it. Apple is said to have streaming rights but the company doesn't trust the mobile service providers to provide a constantly usable connection to a cloud service to forego local playback altogether yet.
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A developer beta of iTunes Match just went live yesterday and brought with it a previously unannounced feature that will surely go a long way justifying its $25 annual price tag.
The service, announced during Apple's WWDC 2011 in June, scans your entire music library and compares it against some 18 million songs in Apple's database. Those that are matched – even the ones that have been downloaded illegally – will become available for download onto your devices as if you've purchased them via iTunes, the rest will be uploaded, and low quality songs will be upgraded to 256kbps AAC files.
Until now, Apple hadn't advertised streaming as part of iTunes Match, but now it has enabled the option. It could be that the company was still negotiating streaming rights with major labels when iTunes Match was announced, or perhaps it just decided to add the feature along the way. Whatever the case it seems Apple is ready to play hardball against Google and Amazon, which launched similar services earlier this year.
The move also puts Apple in direct competition with subscription services like Spotify or Rdio, as it gives users access to their entire music library through Wi-Fi or 3G without using up valuable space on their iOS devices.
The full iTunes Match and Apple iCloud are expected to go live in the fall when iOS 5 and the next iPhone arrive. Check out the video below for a short demonstration of the new music service in action: