Exactly. The gutted the service for the tech destroying the cool parts (like online only songs for 10 cents) and used it in some marginally useful feature. (My music library is fairly cleanly organized. Its not that hard to upload the whole thing to Amazon or Skydrive or Google)
If Apple wanted an on demand subscription service I think they could have one. Its just not a priority for them because it won't make as much money and if they were to acquire something like Rdio I fear it probably just become more expensive.