So what can Apple do to kill it? Could iTunes on the iPhone/iPod be better, and are there any Spotify tricks Apple should nick? Here are eleven ways Apple can beat the European upstart.
1. Start offering an iTunes subscription service
You know it, we know it, Steve Jobs knows it: the musical wind is changing, and in the not too distant future the idea of paying to own music will seem as quaint as having a giant handlebar moustache and travelling by Penny Farthing.
Apple's interested in hardware, not software, and a subscription service won't harm iPod or iPhone sales. Quite the opposite: we can easily imagine The Kids going crazy for an iPhone 3GS with an unlimited music subscription built into the monthly data plan.
2. Add wireless syncing to iTunes
Spotify's Wi-Fi synchronisation is very nifty, and it's something we've wanted to see the iPhone do since day one. And no, MobileMe doesn't count. Apple got rid of the dock ages ago. Surely it's time to get rid of the USB cable, too?
SYNCING FEELING: Syncing via Wi-Fi is an excellent idea, and we can't think of any reason why iTunes shouldn't do it
3. Stream everything in iTunes
Spotify's playlist is big, but at 6 million-odd tracks it's nowhere near as comprehensive as iTunes' selection of over ten million songs - and Spotify might not have permission to stream all of that catalogue, either: earlier this week, Spotify had to remove Bob Dylan's stuff until such time that it can prove it has the rights to stream his music.
4. Cache content
What makes Spotify on the iPhone so desirable is its caching: you can download playlists to your phone and cache all the songs, enabling you to play them back even when your iPhone's in airplane mode. A subscription version of iTunes could and should do the same.
5. Make offline available online
For those of us in places where 3G coverage ranges from patchy to completely non-existent, such as "pretty much anywhere that isn't a city", it'd be extremely handy to have an offline mode that works independently of our phones' cellular radios.
OFFLINE: Spotify's offline playlists are a brilliant idea, enabling you to keep on listening even when you can't get online
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Writer, broadcaster, musician and kitchen gadget obsessive Carrie Marshall (Twitter) has been writing about tech since 1998, contributing sage advice and odd opinions to all kinds of magazines and websites as well as writing more than a dozen books. Her memoir, Carrie Kills A Man, is on sale now. She is the singer in Glaswegian rock band HAVR.