A few things about your otherwise great idea: 1) Grooveshark exists, it approximates the holy grail in my opinion, not all the way there but pretty damn close.

A few things about your otherwise great idea: 1) Grooveshark exists, it approximates the holy grail in my opinion, not all the way there but pretty damn close. 2) We do not know if Amazon could or would crack down on suspect pirated music. As stated in another comment, they have some rights concerning your files. 3) Will Apple allow a native cloud player for iOS? Perhaps an HTML5 version could work.