If I use Time Machine to back up my hard drive on a SimpleTech device, do I need to also back up my Itunes purchases on CDs?
iTunes stores your purchased items as files on your hard drive, so yes, Time Machine is backing them up.
There have been reports of iTunes customers being allowed to re-download their purchases in cases where they were lost. This is not Apple’s official policy, but something that appears to be approved on a case-by-case basis.
If you burn purchased songs as an audio CD, you do gain the ability to play that disc forever even if you can no longer authorize your iTunes account on a computer for some reason. So there may be some archival value to making CDs.
No comment on the OP’s question, but I can confirm this. My wife’s computer died and after getting a new one, we were able to email iTunes support and they made all of her purchases re-downloadable. With the exception of one or two songs that she had bought but were for some reason not in her account history. The whole thing was kind of a hassle, and it ultimately brought my wife over to the “DRM sucks” side of the issue, so now we buy all our digital music from Amazon MP3 or direct from the artists.
If you bought “iTunes Plus” tracks (not all songs are available this way), they’re DRM-free and can be played directly from the copy.
As long as your backup is good, you shouldn’t even have to re-download from the iTMS. If you have a catastrophic failure of your computer (such that, when you replace the hard drive/logic board/etc.), iTunes might consider it a “new computer”. In that case, you can simply [re]authorize it. Normally this is easy to do, but you’ll probably want to deauthorize the “old computer” too. In this case, you have to deauthorize all the computers and then reauthorize all the good ones. More information here.
Re/deauthorizing is in the “Store” menu of iTunes. Up to 5 computers can be authorized at a time.
[Why doesn’t the Cocoa dictionary have ‘deauthorize’ as a valid word?]