I don't buy this. I know exactly one person who actually streams music on his mobile device, while most others rely on downloaded music. These other folks do know and use streaming music on their PCs but the limited data plans in US kills any prospects of streaming media on a regular basis.
The thing is of course that "many" people is not even close to the majority. in fact the HUGE majority of people don't have such huge collections. MS can't make apps focused on the "poweruser" with gigabyte collections and tens of thousands of songs and ablums who want to tweak and mess with every part of the music.
they need to target the large majority of average users who want simple apps that do what they wants, fast and easy.
Note: This is from a pool of about hundred people I know and interact in real life on a regular basis.