Here is Amazon's description of their new tool on their website - a letter from Jeff Bezos, CEO at Amazon:
Apparently the (evil) record companies don't like Cloud storage for music without the copyright police having access. It's external storage for my computer guys, not a new insidious file-sharing, royalty avoiding tool. Amazon's position is:
Cloud Player is an application that lets customers manage and play their own music. It's like any number of existing media management applications. We do not need a license to make Cloud Player available...
[W]e do not need a license to store music in Cloud Drive. The functionality of saving MP3s to Cloud Drive is the same as if a customer were to save their music to an external hard drive or even iTunes.Sounds right to me, which means it will end up in court and probably be ruled illegal.
Amazon May Face Legal Action Over Its New Cloud Player