Microsoft may be launching a Spotify-style music service on the Xbox 360 on October 26. Sources say the service will launch in conjunction with Windows 8. Like Spotify, the service will allow you to subscribe and stream unlimited music, or listen to songs for free as long as you put up with advertisements. The service will be available on Windows Phone, Windows 8, and Xbox 360.
The service will also allow users to integrate SkyDrive and store music and playlists to be be shared across Microsoft devices. The eventual plan is to allow users to stream to iOS and Android devices as well, but that will come at a later time.
While the Xbox already features LastFM built in, that service doesn't allow you to stream specific songs or create playlists.
I don't know about you, but I use my 360 as a media player (Netflix, streaming from PC, YouTube) as much as I use it as a gaming machine. So anything that makes it easier to play the media I want to hear, when I want to hear it, is welcome.