Sure, I do have a local backup. But restoring from backup is inconvenient, and an important part of why I bought on itunes instead of ripping my own cd's was to reduce hassle and make my life more easy.

EDIT: And to restore from backup you have to know you're missing it. They never gave me any errors or warnings. Just a few things were missing. They're basically gaslighting their users.

The knowing it's missing is a great point! I was going crazy because I felt like my music was changing but I couldn't really tell, since I mostly play on shuffle. Took a little while to notice what was going on.

Seems like people didn’t know. Legitimate users didn’t know, while experts did.

More seriously, what prevented an Apple user from uploading it on Torrents? Was it watermarked so Apple would find the culprit?

No watermarking besides the standard AAC tags saying who the owner is.

Steve Jobs argued for DRM free music as a means to interoperability instead of licensing FairPlay way back in 2007 in his “Thoughts on Music” post. He argued that most music was already DRM free and easily copied and only a small percentage of music on most iPods was bought from iTunes.

Funny how it's so easy to forget this when you're the big player now.

Apple was the big player for digital downloads and music players then.

Fair point. I was thinking more around the era of 2004.