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Of the 2 million songs available at Rhapsody and Napster, over 500,000 were from CD Baby

If that's what it means, it is a bit misleading since it is combining two other services (Rhapsody and Napster) against one (Apple).

I read it as him stating that Rhapsody and Napster each had around 2M songs, and .5M of each were from CD Baby.

That is- they both had, with exceptions, the same 2 million songs. And of those 2 million available, CD Baby provided some 500k of them.