I just don't get streaming services. How are they different than listening to the radio or to on-line radio?
The difference is that by streaming music instead of listening to the radio, we burn data. Burning data can slip us into higher tiers so that AT&T, Verizon, etc can make more money. AT&T, Verizon, etc provide the subsidies that deliver big profits to the smart device crowd (Apple, Android players, etc). In fact, I suggest that AT&T, Verizon, etc are Apple's most important customers (much more so than us individual consumers).
If you listened to radio or had radio built into smart devices (which would be very easy to do), you don't burn cellular data, AT&T and others don't get to meter such play, and thus there's no money in it. So, if I'm AT&T, etc, I discourage the inclusion of radio in these do-everything, portable smart devices (BECAUSE there's no money in it) and when I get the smart device makers pretty much dependent on the subsidies I pay, I squeeze them to "innovate" functionality that burns more and more data. I think that what gets signature apps like Siri, maps, iCloud, iTunes match, iRadio and so on.
Or indeed how do they differ from the user-generated playlists that we used to see in iTunes? If I like a song I buy it. I don't want to rent songs.
Generally, they differ by them having more control of what gets played and you getting the joy of listening to lots of ads while paying that rent. They also get to control the quality of the files.
If you own the songs, you completely control the playlist & quality of every music file. That playlist is ad free. You could listen to music 24/7 and never burn a byte of cellular bandwidth. After you own the song, there's no money in the ownership model for AT&T, etc or Apple/Amazon/Google (via advertising and/or a subscription model), so it's falling out of favor. Basically, the spin is on to make "stream everything from the cloud" cool, though it's more a play to steam cash from your wallet.
Where does it make sense? Scenarios like this one is best fit for the streaming services...
I listened to about 40 different songs yesterday on Spotify that I picked out specifically for my own playlist. Instead of paying (on average) $40 for those 40 songs, I pay $10/month. That would have been 1/3 of the cost of spotify for a year in 1 day. If you listen to a large variety of music its well worth it.
But even there, if new music discovery is important and profit objectives didn't rule decision-making, good old (free) radio would be a much more cost-effective option to build into our smart devices. He did the math like the streaming cost vs. the individual cost was ALL of the math but he's leaving out the cellular bandwidth cost (which might be spun as "unlimited*" though we know that asterisk does mean something). He's also leaving out that by renting the music instead of owning it, he has to keep renting it in the future. When he chooses to stop paying that rent, he stops being able to access all those songs. Maybe he liked listening to those 40 but might want to listen to only some of them again and again in the future. If that "some" was about 10 or so (about 25% of the new music discovered), owning those make them more economical in that future (where he could pay $0 to replay the owned ones vs. having to continue to pay that $10/month to play them again).
Another scenario would be the one where the new music discoverer spends most of his time in a free wifi zone. That beats the cellular tier hook though it still doesn't beat the forever rent vs. buy-it-once ownership issue.
I think it also may apply well to the crowd who have not yet accumulated much of a music library of their favored music. I suspect that depth of the owned library influences this question. For example, the guy with 50 favorite songs in his music library would likely get bored of that 50 if he tried to get by on only them. However, another guy with 3000 favorite songs can shuffle play such a list for a long time before he might find himself bored with every song.
I suspect the new music discoverers who buy some of their discoveries on a regular basis eventually build up a library fat enough that they become less interested in continuing to pay the rent, replacing it with owned music playlists of accumulated favorites. In other things there's rent, rent-to-own and own. In the latter 2, once something is owned, there's a certain joy in not having to continue to pay for that something while getting to continue to use it in full. There is no joy the other way. Eventually the utility of renting for seemingly greater benefit (vs. owning) evolves into recognizing the ongoing burden of rent. Even down at this cheap, micro-cost level, I think that sense of ongoing burden vs. ownership will show itself in time.