It depends on exactly what Spotify does for you. Launchcast was a pioneer of personalized internet radio, starting in 1999. Pandora offered a similar service in 2005. Both of those services claimed legality through mechanical licenses for non-interactive play.

In the ~ 2005-2008 time frame, many monthly services sprang up to offer play any song from their catalog on demand, along with limited downloading, based on Microsoft's PlaysForSure DRM program. Services included Yahoo Music Unlimited, Napster to Go (lol), (Real) Rhapsody, MSN Music and a bunch more. Afaik, this was all legal, but Microsoft shut down the DRM program with, I think, very little discussion as to why (but probably had to do with lack of market share in portable players)

I do recall some issues with the catalog on Yahoo Music Unlimited where the non-interactive catalog was bigger than the interactive catalog, because non-interactive has mechanical licensing and interactive play requires an intetactive licensing exercise between the rightsholders and the service provider.