I heard a talk by Andreas Ehn (Spotify's former CTO) last year and he actually mentioned in his talk that piracy was the benchmark they were trying to compete with Spotify.
Piracy still is the market leader in catalogue size and ease of use for consumers at large (just see the AVC post in another comment). This is actually a fantastic way to look at it - Spotify didn't set out to beat iTunes or any existing market player with a business model, they wanted to beat piracy.
Now that's an ambitious goal, even though many other services aim at doing the same indirectly (by beating existing market players).
Piracy still is the market leader in catalogue size and ease of use for consumers at large (just see the AVC post in another comment). This is actually a fantastic way to look at it - Spotify didn't set out to beat iTunes or any existing market player with a business model, they wanted to beat piracy.
Now that's an ambitious goal, even though many other services aim at doing the same indirectly (by beating existing market players).