This is an interesting idea but I don't think it will have that big of an effect... I still see tons of people say if it has DRM, then screw it. I kind of agree with that, as I want to be able to do whatever I want with the music I pay for. The customer not only wants convenience but they want flexibility, and this service sounds like it will limit flexibility unless you spend more money.
Now if this application is completely web based, so you can access your music while at work, and on the go via a plugins or small apps for phones, then I can definitely see some people getting addicted to the convenience of this service. But if it is restricted to one computer will internet access... and then (from what it sounds like) have to pay to download a DRM protected mp3 to save it to an iPod or whatever, then I don't see the appeal.
On a similar note regarding mp3s in general... no matter what, I still feel music is too expensive and DRM is pissing everyone off. I know 99 cents isn't a lot for a song but you put 10 of those and you've nearly have the price of an album on CD. The prices seem to be a bit better then they used to be but still too much I think. 29 cents for a song, 39 for a popular/new one. $2-3 for a full album.
With these prices and DRM-less mp3 downloads, plus with sufficient TV/radio/internet advertising, I bet you could double your legal mp3 sales. I personally buy some of my mp3s off amazon because they are DRM-less, and I love it. Sure I share them with personal friends sometimes, transfer them between my personal devices... but they still got some money. You are never going to completely stop piracy, so prices need to be very competitive while access and use need to be easy. At this rate $1 for a song is too much for me and I only spend it if I really like that artists music... but if they were 29 or 39 cents each, i'd be buying a hell of a lot more music online.