That may be how it is, but it is not necessarily how it has to be. It is possible to build a system where the data is encrypted with per-user private keys, which never leave the user's device(s) - at least, not in the clear, and ideally only when being migrated/copied to other devices. Do all the crypto on the device, transmit & store it with private keys unknown to the owners of the infrastructure.
For all I know, this might in fact already be how iTunes & iCloud work already; that certainly seems to be the implication in the statement that data is "placed under the protection of your passcode ... [therefore] it's not technically feasible for us to respond to government warrants for the extraction of this data" (from your mashable.com link). I'm pretty sure various online back-up services work this way.
Of course, there has to be a certain level of plaintext metadata: the fact that you have an account is not secret, nor are the amount of data stored, the access times, and the network addresses of devices used to access it. But the data itself? A system in which the service provider doesn't have centralised private keys is absolutely, completely feasible.