Music Piracy absolutely still exists although WhatCD going down hurt it a bunch. However, the real trick of music streaming sites is to build in all of the scrobbly/suggestion/organisation features in.

Piracy grows when it is more convenient than legal consumption. I'd rather download a torrent of a DvD I own than go and fetch it, put it in a cd tray, play it with shitty un-skippable intro etc. However - I'd rather spin a film up on Netflix than go hunting through a shitty folder structure of my own idiotic devising. I'd rather watch a series on netflix, which remembers where I am in the series and auto-plays next than manually load up episodes on the odd evening when I've got time.

Admittedly Netflix seems to be going out of its way to make the UI intolerably aggravating, but at some points it seemed pretty well done.