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I can't speak for them, but yes it almost certainly stores it in a database and queues it for processing by a command line tool like ffmpeg. You could just have a script that checks to see if there are songs in the queue, then runs the command line tool against the next song in the queue when one of a specified maximum number of processing slots is available. You could fire that monitoring script with a cron.

This isn't the type of service that would do massive Youtube-like volume, so I cannot imagine that they are doing anything special to handle high volumes of uploads. I would guess that a single lower-end AWS server would do an adequate job for the volume they'll be handling.

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