The app is capable of streaming music over Wi-Fi or an EDGE or 3G data connection. It also offers the ability to store offline playlists that can be listened to in the absence of a Wi-Fi or cellular data connection, a feature that directly competes with the iPhone's iPod application.
Spotify offers a video demonstrating the app on YouTube:
Spotify's music subscription service is only available in a handful of European countries at the moment, including Sweden, Norway, Finland, the UK, France and Spain. Accordingly, the Spotify app is not available in the U.S. App Store. Where it is available, the app is free though a Spotify Premium account at a monthly cost of 9.99 Euros is required to use it.