Spotify offers legal and free access to a library of music through its streaming music player. The company's dream is to let everyone listen to whatever they want, whenever they want, and wherever they want. Getting its application into the iPhone App Store brings the company one step closer to a dream come true.

"Spotify on the iPhone will include many of the features our users enjoy on the desktop, with the added advantage of letting you listen to your playlists even when you haven't got a network connection -- for instance, when on a plane or the underground," said Spotify's Jonatan Littke.

Antitrust Concerns

Apple has previously allowed streaming on the iPhone, but this is the first time the company has allowed caching with a well-known music application. That puts the Spotify app in quasi-competition with the iTunes Store.

"If you are listening to streaming music with caching, in effect that's an all-you-can-eat model and you don't need iTunes, at least not for music. You would certainly need iTunes for video content," said Rob Enderle, principal analyst at the Enderle Group. "Apple denied Slacker the right to cache, so this is interesting."

Enderle said Apple may be allowing Spotify to cache because of the increasing federal scrutiny of the company's practices. As he sees it, not allowing Slacker to cache its music was a competitive move, much like removing Google Voice from the iPhone. With the feds looking over its shoulder, Apple may be in the mood to loosen up its application-approval guidelines.

"Apple is being much more lenient at the moment because they don't suddenly want to be involved in an antitrust investigation. They would like those investigations to go away before someone takes control of the App Store away from them. I don't know if it will work because there's so much history of this behavior up to this point, but it certainly won't hurt Apple, and it should improve their image."

The Rhapsody Question

News of the Spotify approval comes on the heels of RealNetwork's application for a Rhapsody streaming-music app for the iPhone. Essentially, users would have access to millions of songs without taking up any storage space on the iPhone. Analysts still aren't sure if Apple will allow Rhapsody on the iPhone.

"Rhapsody does cross over solidly into the iTunes space into the gamut of their offerings and they probably look at Real much more like a competitor than a dedicated streaming service ," Enderle said. "While Spotify's approval doesn't ensure Rhapsody is going to get approved, it does improve the odds. It would be a clear indication that Apple is not being anticompetitive and that anybody can play on the platform."