First off, this isn't what many of us originally speculated: it's not a DJ deck inside Live. Instead, the collaboration seeks to bridge (ahem) the gap between the way DJs perform and the way Live users perform. The result focuses on the way a performance set is assembled in the two paradigms, an attempt to guide the flow of music between the two programs. Here's how it works.
Bring Serato “mixtapes” into Ableton Live: Save a DJ mix – called a “mix tape” – in a Serato product, and export it to Live, and what you get is all of your edits in a form that can be further manipulated in Live. Waveforms and automation data from your DJ session, however they’re manipulated and transcribed by the Serato software, appear in Live.
Put the Ableton Live Session View “inside” Serato: Here’s where things get in interesting. Rather than put Serato inside Live, we’re getting Live inside Serato – after a fashion. Ableton Live runs in the background. Integrated into the Serato interface (as seen at the screenshot at top) are all your Session View clips from your Live Set. Serato’s control – via audio input from vinyl or CDJs, or an ITCH control surface – manipulates the entire transport of the Live set.
The Bridge is free for anyone who owns both a registered version of Serato Scratch Live (or ITCH hardware) and Ableton Live 8 or Suite 8. No release date has been set yet.
More info: Ableton / Serato - The Bridge