Apple and Google are both rumored to be working on music streaming services, but the first real competitor to enter the streaming music battle is Amazon.com.

The company has announced Amazon Cloud Drive, a web-based backup service where you can store your documents, photos music and other files. To go along with Cloud Drive, Amazon is offering Cloud Player, which can stream your music library to any web browser or Android mobile device. Cloud Player also allows you to download files and create playlists through its web-based interface. Note, however, that Amazon is using Flash Player to upload and stream music which means it won’t work on Apple’s iOS devices.

Amazon is offering 5GB of Cloud Drive storage for free to anyone with an Amazon account. That number can be bumped to 20GB with the purchase of an Amazon MP3 album. Additional storage works out to $1 per GB, with plans at 20GB, 50GB, 100GB, 200GB and 1000GB.

At the high end 1000GB will set you back $1000 per year, which is enough to buy roughly 10 TB worth of external hard drives every year. Of course your external hard drives don’t live in the cloud and won’t let you listen to music wherever you are, but if it’s just backups you want, clearly there are cheaper alternatives.

The real appeal of Cloud Drive only comes into play when it’s used with Cloud Player. Bring the two together and you can stream your music library to any web browser or Android mobile device.

While an online music locker capable of sending your music to any device feels almost inevitable at this point, Amazon’s offering is, thus far, disappointing. The interface is awkward and looks a bit like Hotmail did when it first launched — primitive. For example, using the web interface, there’s no way to download more than one file at a time.

Any music you already own must be manually uploaded, there is no automatic syncing like you’ll find in file backup services like Dropbox. The Amazon MP3 Uploader can scan your iTunes library and makes uploading a bit smoother, but if you’ve got a sizable music collection — several hundred gigabytes of music — you’re looking at days, if not weeks, to upload everything to Cloud Drive.

Cloud Drive is much better if you’re buying all your music from the Amazon MP3 Store, and clearly this is what Amazon would like you to do. To encourage that, songs purchased from the Amazon MP3 store and saved directly to your Amazon Cloud Drive never count toward your storage limit and are free to store forever. Couple that with rumors of Amazon working on an Android device and it isn’t hard to see how Cloud Drive, though basic at the moment, might one day become a serious iTunes competitor.

But there are possible legal problems Cloud Drive may have to overcome. The record industry still believes that you should buy a new copy of every song for every device you own, and Amazon has no way to determine whether you actually purchased your existing music files. MP3tunes, which also offers to store and stream your music library, was sued by music labels. Amazon, however, doesn’t believe licensing will be a problem. “We don’t need a license to store music,” Craig Pape, director of music at Amazon, tells the New York Times. “The functionality is the same as an external hard drive.”

Web-based services offer a way to access your data from anywhere, whether you’re on your phone, your iPad, your laptop or your networked TV. With more than 15 million iPads sold and some 79 million users with three or more devices on their home network (according to a 2010 consumer survey by Forrester Research), knowing which files are where is a tangled nightmare. The solution that Amazon, and Apple and Google as well, are betting on is a centralized server that will be the “real” home of your files; your various devices then connect to the server to grab those files.

Amazon may be first to the market among its sizable competitors like Apple and Google, but Cloud Drive in its current form isn’t particularly innovative, nor does it offer many of the features long-standing competitors like Dropbox or MP3Tunes already have. Still, Amazon’s Cloud Drive already has Google and Apple beat on one count — it exists.

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