Now that Apple has played its hand with the iCloud service, online retailing giant Amazon.com has raised the stakes in the looming battle for cloud-based music services and is offering unlimited storage of music files for a low yearly fee. The change comes packaged with a few other enhancements to Amazon's music service that the company hopes will make the service more enticing to users.

Amazon's cloud music service is comprised of two parts. Amazon Cloud Drive provides online storage to customers in both free and paid variants. And Amazon Cloud Player provides a web-based music-management and playback experience, working with music files stored in Cloud Drive. I previously reviewed Amazon's new cloud offerings on the SuperSite for Windows.

"Customers are already enjoying Cloud Drive and Cloud Player, and now for just $20 a year, customers can get unlimited space for music," said Amazon Music Director Craig Pape. "Additionally, we are adding free storage for all MP3s purchased from Amazon MP3, and support for the iPad. Our customers love Cloud Drive and Cloud Player, and we're excited to innovate these services on their behalf."

Previously, Amazon offered a free version of Amazon Cloud Drive that provided 5GB of storage and then paid tiers starting with 20GB of storage for $20 per year and running all the way up to 1TB of storage for $1,000 per year. Under the new terms, customers who purchase any storage plan (including the 20GB tier for $20 per year) will receive unlimited storage of music files (MP3 and AAC format). And Amazon is refunding the difference to customers who previously paid for higher, more expensive tiers. (For example, I purchased the 50GB tier for $50 and am receiving a $30 refund.)

Additionally, Amazon announced that its web-based Cloud Player is now fully compatible with the web browser in Apple's iPad. And although iPad users might gripe about the lack of a native app, I'd just point out that Windows and Mac users also access the service through a web browser, and not through a native app.

Amazon was the first of the big three—the others being Google and Apple—to announce and release a cloud-based music service this year. At the time, I noted that while Amazon's service was excellent, the cost was problematic. "Amazon's pricing chart for Cloud Drive amounts to roughly four times the cost of similar tiers for Google's cloud storage scheme," I wrote, comparing Cloud Drive with Google's (non-music based) cloud storage. For example, "Google offers 200GB for $50 a year, but that amount only gives you 50GB on Amazon." With this change, Amazon nicely undercuts Google, though it's possible that the online giant will respond in time.

It also undercuts Apple. Apple was widely expected to launch some form of music service as part of its iCloud platform, but the company won't attempt to duplicate the ability of Amazon and Google services, which let customers upload their entire music collection to the cloud and then stream music to PCs and devices. Instead, iCloud will offer no streaming at all and will provide storage only for newly purchased songs. (For an additional $25 per year, iCloud users can purchase iTunes Match and receive high-quality AAC versions of many of the songs in their music collection; these songs will be stored in the cloud but still cannot be streamed.)

Put simply, Amazon's changes put it back where it was when it first announced the service: ahead of the pack. And that will remain the case until and unless Google and Apple make changes to their own services.