Welcome!
It's good to see more people comign along interested in music! All we know so far about the music system can be found here.
In brief though, as far we as know (and I'm not familiar with the music system with LOTRO even though I've played the game) we will be able to ply our own music into the game somehow, possibly through MIDI. I believe we'll be able to play in groups, at least I hope so as I'd like to do something similar.
If you're interested in being a musician in game though, there are two guilds currently focusing on music. There's my guild (which is EU based) and there is also a bard's guild in NA (can't find the link, sorry).
Hope you enjoy your stay here, and look forward to maybe seeing you in game :D