Based on calculations I did back in April, Spotify has about 3 million paid users and 10 million unpaid users. Spotify said they were on track to do close to $900 million in revenue this year. About $662 million was set to go to the record labels. After all of Spotify's considerable costs, they'll run a loss.
When Pandora went public last year, they did it on $75 million in revenue and $74.25 million in expenses in that quarter (a 1% margin).
The more successful Spotify and Pandora get, the more likely the record labels are to ask for more money in contract negotiations.
These are great companies that make great products. They will unfortunately be sharecropping on the music labels' land.
Just as many of us consider it unwise to build on Facebook or Twitter's platforms, we should be just as wary about building a business on top of the music or movie business (Netflix is in the same boat).