Although I was expecting more from Apple's latest announcements, I've had a few days to play with the Genius feature introduced in iTunes 8 and I'm quite impressed. Pick any song, and it builds a playlist of other songs that fit well with that one. It's a fun and useful feature for those of us too lazy to build playlists by hand, and bored with the auto-playlists (such as by genre, song length, or date added) and the random shuffle feature.
I was worried that the feature would be too obvious--for example, that it would just recommend songs in the same genre or by related artists. In fact, it's much more interesting than that. I'd guess that it's comparing data from millions of other iTunes users who have signed up for the service (part of the install process sends information about your library to Apple), then matching songs that appear frequently with the selected song. It's probably also using my own playback data, favoring songs I've played back to back and have not skipped.
For example, when I picked a Love and Rockets song, it came up with some predictable picks--two more L&R songs, Siouxsie and the Banshees, and Catherine Wheel--but also had some outside picks like Ministry, The Pixies, and Sisters of Mercy. All of these songs might be broadly categorized as "music that loud-rock fans in their late 30s liked in their wasted youth," but I wouldn't have put them together.
Other experiments revealed a similar mix of expected responses and surprises: a search on a George Harrison tune from All Things Must Pass not only threw up other classic rockers Neil Young and Steely Dan, but also modern-country chanteuse Neko Case and ethereal country-psych outfit My Morning Jacket. Very nice.
I did have some problems getting the Genius feature to recognize certain artists, like Fantomas and Fela Kuti, and my attempt to update the Genius feature from the Store menu resulted in an error message, as it couldn't find some mysterious folder it was looking for. (On my hard drive? At Apple? Who could tell?)
There's also a Genius Bar that recommends similar songs from the iTunes Store that aren't in your collection already, but I hardly buy any music online, and many of the recommendations are already in my LP collection but not yet digitized. So this feature doesn't do much for me, but could be useful for folks who buy lots of music online.
At any rate, it's a free update to a free piece of software, and I can recommend it without reservation for Windows XP users. Vista users, however, might experience the dreaded Windows blue screen o' death when they upgrade and connect their iPhone--check out iPhone Atlas for some possible fixes.