Services like Spotify and Netflix are marginal cost services. Their intent is to monetize the previously non-paying customers like yourself at unheard of low pr

Services like Spotify and Netflix are marginal cost services. Their intent is to monetize the previously non-paying customers like yourself at unheard of low prices. However, it's not all gravy. Marginal cost services cannibalize a portion of the existing market. The degree to which this happens depends on the popularity of the service. It may a small percentage or in the extreme, every customer. If Spotify remains relatively small and is kept in check, then it will likely be a net benefit to artists and labels as it costs them little to participate. However, it's also a disruptive innovation at a radically lower price point. If the lion's share of the music market were to switch to Spotify or a similar service, the drop in revenues would not sustain the market since great content is labour intensive and expensive.