Lately there have been a lot of rumors about Apple finally leveraging their acquisition of Lala to move iTunes to the “cloud”. In a nutshell move iTunes entirely online meaning no matter if you have your iPhone, your Laptop or say for example an iPod touch you could with internet access not only your entirely library but possibly the entire iTunes song catalogue. I’m less interested in how it how it will function to the consumer, but very intrigued technically about how this service will exist.
1. Wireless Syncing
I assume what will happen is wirelessly Apple is going to sync your music libraries across devices. How it will do this is to check your iTunes database file and see if any changes have been made to it and then pass the file to each device.
On my computer these files are a total of 22 megs and I have 10,000 songs so its not a huge pain to sync these even over 3g.
2. What if New Songs are purchased/added?
My prediction here is Apple already gets users library information via Genius. I believe its done anonymously, but obviously its linked to your iTunes id. Apple probably will look to see that you are logged in with your iTunes ID, check to see if there were any modifications to the database file and make references to the song files. They’ll need to do a bit of magic here. First off if the songs were “purchased” from iTunes I assume they’ll just wirelessly stream them from iTunes servers to your device. If the songs were ripped from cds or download from the internet they will probably over the internet access the files if available and allow you to wirelessly stream them.
3. How will AT&T Handle This?
With the rise in bitrate for song files (Apple has moved from 128aac files to 256files) songs are now quite large. An average song is probably about 8 megabytes. Passing that over AT&T’s network isnt horrible, but say you listen to 20 songs a day on your iphone you are going to go over your 2 gigabyte limit and have to pay AT&T a bit of extra dough 
My assumption here is Apple has a very good idea about how often people plug their iphone into the computer and will have easy ways for people to sync songs across devices so they don’t always have to be streamed over the internet.
4. 802.11?
Right now Apple’s new Face Time video conferencing solution for the iPhone 4 only works over Wifi. Thought streaming songs requires a lot less bandwidth than video conferencing I could see Apple doing a couple unique things when they detect your iPhone or iPod device is connected via Wifi. What they could do is if the user is connected via 802.11 and they load iTunes it could prompt the user and say hey we see you have some songs on your computer that your phone doesn’t have yet mind if we transfer them. Within minutes the library will sync and all your new songs will now be on your device.
5. When Will iTunes in the cloud launch?
My prediction on this is fall alongside a remodeled iPod touch (with a video camera), a larger iPod shuffle and the official death of the normal iPod Classic 
Apple has a music event every year and its the perfect stage for the debut of iTunes in the cloud. If I had to guess a slogan it will be Itunes 9.5 Your Music Anytime. Anywhere.