Doesn't have to be one or the other. Pay Spotify $10/month to discover new music and then go buy lossless copies of the albums you really care about. Most records I could live without but those few special ones I have backed up in S3 in FLAC.
I back up my music collection locally, and I have double-redundancy of sorts (it's backed up to a RAID 5 array on a file server, so in theory it could withstand the failure of the original drive and one of the back up drives), but if worst comes to worst I could just acquire everything again.
With a couple of exceptions they're just lossless copies of widely available music recordings...
That would be a viable back up strategy, though. Have a rare copy of a recording? Make it widely available, then if your copy is destroyed, the odds of you being able to acquire an identical copy again are much improved.