Tom Davenport and Charles Arthur for The Guardian:

Apple is working on a new audio file format that will offer “adaptive streaming” to provide high- or low-quality files to users of its iCloud service.The new format could mean that users can get “high-definition” audio by downloading to an iPhone, iPad or iPod Touch. Alternatively, it could offer a streaming service – like that of Lala.com, the music streaming and online storage company, which Apple acquired late in 2009.

The report indicates that the service will adjust sound quality depending on bandwidth and available space on the target device. Apple for its part refuses to comment on rumor, of course.