Apple’s iTunes streaming service has begun testing, and it appears to be better than expected.

The service, known as iTunes Match, will be a paid-for feature ($24.99 a year) in iCloud, the company’s online storage service. The word match is the key there as this isn’t cloud computing in the traditional sense and in the way rival music services such as Google Music work.

Instead of users uploading their music files for remote access, which a pain in the butt for users with large collections, Apple instead scans a user’s iTunes library and matches it to its own set of files. Users are then automatically able to access a 256Kbps copy of the relevant files on Apple servers, which is good news for those who now regret ripped their disc collection at a lower bitrate. It appears there’ll still be a separate copy of the file online for each user, so it’s not a space-saving measure for Apple.

The matching library includes all four major record labels, which was one of the barriers to launching the service. If you have music that isn’t in Apple’s library, you can still store it online, but you’ll have to upload it. There’s a limit of 25,000 songs covering both matched and uploaded tracks.

Once the library is in place, you can download it to any Mac or internet-connected iOS5 device. You can also stream it without downloading first, using either a Wi-Fi or 3G connection. The service works for up to 10 devices, of which up to five can be computers.

The bad news is that the service will be US-only at launch, and the need to get separate streaming licenses for other countries means it could take a long while to roll out internationally.

The service is currently available to registered Apple developers only. They’ll have to pay the $24.99 fee now, but once the service goes public they’ll get 15 months’ membership without any additional payment.