Because musicians still get paid by the sale or play (like radio). It was far cheaper to treat streaming like radio, so YouTube scans uploads for music and pay

Because musicians still get paid by the sale or play (like radio). It was far cheaper to treat streaming like radio, so YouTube scans uploads for music and pays money to musicians for each play. If youtube encouraged downloading, there would be no easy way to count the number of plays of music or pay musicians, which would lead to lawsuits galore.