It's a great service. More or less, you type the artist you want to listen to, click on the song you want, and it starts playing.
And I think it's good for the music business. At the height of the business, when people were both new CDs as well as back catalog, to replace worn out vinyl and cassette albums, the average consumer was spending about $3/month, which was split between retailers, distributors, labels, publishers, songwriters, producers, and artists.
If we can get 2-3x that money, without worrying about the "middlemen" and costs of physical distribution, we'll be in good shape as far as revenue.
Plus, a service like Spotify allows consumers to explore music. You can find an artist that you like and, instead of focusing on one album or a single you've heard, you can dig deeper, going into back catalog and more obscure recordings, of which Spotify has many.
This gets people more interested in and involved with the acts they like. Knowing one song is great, but knowing entire albums worth of material creates a relationship.
Imagine having fans who knew everything that you've ever done, thanks to a service that paid you every time your music was played? That's Spotify.
Spotify, and services like it, will help you to develop the type of fans you're looking for. People who have access to music like this are more likely to come to a live show, more likely to buy a t-shirt or other mechandise, and more likely to support you in future endeavors.