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If this service plays iTunes files instead of our own, what does it do about tags?

I thought about this too. Augmenting/replacing the tag info with user-supplied tags wouldn't be a hard technical problem to solve on Apple's end, but they're not known for making things very flexible or customizable. It wouldn't shock me if they just said "sorry, you want cloud music, you get stock tags", at least in the beginning.
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- Tony C
my empeg stuff