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Artists are starting to make money on it. The Free version is limited. Not sure how it works in the US at the moment, but here in Norway it started out as free and awesome to make people hooked on it.
Now after a couple of years they changed it so the free version has a limited amount of plays for each song, and 10 free hours per month or something. You also need to pay to be able to use it on your phone. I went from a free account to a paid account when they limited the free version, and I know a lot of others did as well. I think it's a business model that will work.
A quality product that is easier and more convenient to use than pirating music. They got the right idea, and will be able to succeed because of it.
I stopped downloading pirated music when I started using Spotify just because of how easy it is.
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