With Apple the dominate force in digital music, others  must stay compatible (Jobs' closed eco-system is not easy to penetrate) or to compete. (Remember the Zune?)  Today Spotify announced changes that ambitiously try to do both, while also addressing some label concerns that have stalled a U.S. launch. 

New Spotify features include:

• the ability to manage an iPod within Spotify including wireless sync
• a new Spotify download store with lower prices 
• an option to purchase full playlists
• all users  can now use the Spotify Mobile app to sync MP3 playlists

Spotify's goals with this upgrade are many.  Publicly they say its to unify user playlists - the heart of Spotify's popularity.  But the changes are also an admission of Apple's dominance and an attempt to work around it. Of course everyone loves there iPod's. So Spotify is saying: just use our player and download store to power it.

These upgrades and the new download store are also bows to the major labels that Spotify needs to continue expansion into the US and beyond. They want an iTune's competitor even more than Spotify does.

Can Spotify Challenge iTunes? 

It's easy to see how existing users may migrate towards using Spotify as their dominate player. It's less clear that Spotify has given new users enough reasons to abandon the familiar embrace of Apple.

Despite today's updates, the kind of free service that labels allow in the U.S. remains critical to its success.  Because once hooked, Spotify has given users many reasons to stay and eventually to pay.

Video: Spotify Says Hello To The iPod