Xbox music is a fantastic bit of kit, but it does take a bit to get your head around it, and you have probably already made a mistake (Don't worry it's an obvious one to make).
There is a setting in Xbox music on your PC (Charms/Preferences) that says "Automatically add matched songs on this PC to your cloud collection", it sounds like a good idea but in reality it can cause all sorts of problems in the future.
This single item seems to cause more confusion and headaches than any other option and in my opinion should come with a health warning.
The best way to deal with local music (MP3's etc) is to copy it to your phone either on it's own storage or far better still on a Micro SD card.
But because you have probably turned on the above preference (That's how your music is probably showing up on your phone) even if you now copy your music across, unless you delete all your cloud music you will find a lot of issues, for example if you are a Led Zeppelin fan, instead of having 8 or 9 albums with several tracks each you will be down to 1 track, as Led Zeppelin do not allow their music to be used by most services like XBM and other artists do the same for example on Faces albums the "Big" single is often the one missing, even if you have that album locally the matching will take out that single from the album. This can also play havoc with album art.
So what is XBM, it's a lot of things, it's a web based music streaming service, it's a music program on PC's, it's a music app on WP and it's an app and service on the Xbox One (Probably on the 360 as well) add in the music pass and you can see why people get confused and struggle with it.
I have to admit I have up until recently kept away from services like XBM, I worked exclusively with MP3's I had ripped from CD's I own, but after buying an Xbox One and then taking the trouble to understand what XBM and how it works, I gave in and took out a music pass.
I still had to clear up some mess from the "Automatically match" setting (I turned it on on my Surface for 5 minutes but then spent a long time sorting it out and learning about XBM), but luckily I only had a few albums to deal with as all my music was on a Sony MP3 player and I hadn't put much on the phone or my Surface and laptop.
Make sure the Auto match option is turned off on all your PC's, delete all your cloud music that turned up when it was turned on, and even go onto the XBM web login and delete from there.
Firstly on a PC you can stream songs, but on a phone you only get 30 seconds of songs, but if you have been using XBM on your PC for more than six months I don't think you even get that.
So on a phone, without a music pass only use local music or get a XBM pass, on your PC listen to your local music and you can stream.
So to really make XBM come alive especially on you phone and Xbox One consider the XBM pass, I am surprised how much I have used it and I have only had it about 4 weeks and was on holiday with no phone signal yet still had access to all my local and XBM music. OK I don't "Own" any of the music I have downloaded already and if I don't renew my pass next year it will all cease to work and I will be back to local music, but in the last four weeks I have about 30 albums, some of them very obscure that I could have spent years looking for on CD, and it all just works.
Honestly you are reading something typed by the tightest (Money wise) sceptic out there, but I reckoned I was spending a couple of hundred pounds per year on second-hand CD's but so many hours/days of frustration looking for the music I wanted and some I never found, all of a sudden I have what I want, when I want and available on all my devices, and it's already more than paying for the subscription.
And if you have an Xbox One it just makes so much sense of the whole package, especially if like me you bought the XB for entertainment more than games.
You don't have to go for the pass, but you will love it if you do.
But do spend a bit of time figuring out XBM to get the best from it, the only shame is most people find out the pitfalls after they have already hit the danger switch (Auto Match).
On here you will see lots of complaints about XBM, but for me it works, if I add an album to my collection on my XBO within a minute it's also downloaded to my laptop and Surface and with one click it's on my phone and it works in a tent in the middle of Dartmoor with no phone signal let alone an Internet connection.
I still have two gripes with XBM, one there isn't a family pack, but I will be buying my wife a years sub for her birthday, and two, there isn't a dedicated XBM player along the lines of my Sony MP3 player but one that knows about my music pass and can play my local music and my new downloaded collection.
Hope that helps.
Bob