Spotify's Free to Premium conversion rates are, in my opinion, not terrible. Would be interesting to see the YouTube and SoundCloud numbers eventually, sure.

Think about it though - terrestrial radio already offered music for free. Dozens of stations! All sorts of genres!

The only difference is the RIAA/major players had - practically speaking - an iron grip on controlling what was being played on those stations. Thus the free music was an enticement to purchase more objects related to that act. Live shows, t-shirts, etc.

Believe me, there's a lot more money in branding than there is in selling music. Jessica Simpson has made insane truck-loads of money on her fashion line - enough to make her music sales probably look like a rounding error. Free music isn't new to the internet, I guess is what I'm getting at.