Spotify and Beats Music are for big music fans like myself who want to hear a specific song or playlist from their favorites. But there's a much smaller market for big music fans. If Beats can make a play for the Pandora/iTunes Radio audience they have a chance. Otherwise they have to prove they are better than Spotify, Rdio, Rhapsody, etc. for hardcore listeners.
That being said, I've been using Beats' predecessor Mog for over a year now and I like the interface and the known good sound quality (Spotify wasn't the first to have a 320k library). If Beats is easier to use on mobile than Spotify, it could make a dent.
The integration angle though -- that's where players like Pandora have an edge with apps on Apple TV, smart TVs, etc.
Very true, but Beats managed to convince a lot of people to spend ridiculous amounts of money on headphones. If they can work the same marketing magic behind this I see it doing very well.