Ah OK, that makes sense. I guess the big question is: which is cheaper these days, disk space or bandwidth? Is it cheaper to pay the extra 5MB (give or take) per MP3 in storage space, or is it cheaper to pay to download that 5MB repeatedly over the course of the day/week/etc., every time it is played. And I suppose that depends on how often the station plays each MP3.
If users were only using a subset of their MP3s it would be easy enough to just cache those MP3s and keep the rest on S3. The problem is general rotation playlists -- if the user has 500gb of music in his general rotation playlists, we have to be able to play any of those tracks at any given time, which limits our ability to cache "most-used" MP3s (simply because there is no such thing as "most-used" -- in a random-playback situation, every MP3 will be equally utilized).
I like the concept, I'm just not sure if/how it could be reasonably implemented in a cost-effective manner.