I think Spotify will slowly lose independent musicians and eventually lose market when they lose more artists (in fact, didn't a record label recently pull all tracks off Spotify?)
I can see a collapse approaching GroupOn proportions (let's face the inevitable there ;)) if things don't change soon, and for similar reasons (screwing over small business vs. screwing over independent musicians)
One beautiful day music will be free again like in the Napster and audiogalaxy days.
The solution could be to sell music directly to the listener, without middlemen and labels. But then, who handles promotion? Public Relations? Placement? Concert booking? Marketing? When all of these will become individually offered services, like most other web-related services have become, we may see the music revolution begin.
http://www.digitalmusicnews.com/permalink/2011/111110distrib...
http://digitalmusicnews.com/stories/081011spotifyresponds
http://digitalmusicnews.com/stories/091911spotifydefends
etc.
And how is it hurting?