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Remember, streaming only has a business model as long as it has a better user experience than piracy. That's why iTunes took off in the era of Napster. When a streaming service's user experience drops below that of digging up pirate treasure off a shitty ad-ridden torrent site, that service is not long for the world.
Paying 0.99 per song was how a better user experience? Music piracy was pretty big till Spotify. No service was even close before.
Because you were guaranteed that what you were downloading was what it said it was, and was high quality, and would have the correct tagging and album art and all of that.
It's been shown repeatedly that a large part of piracy isn't about cost, it's about convenience. It was easier to pay $0.99 and get what you wanted when you wanted it, than download 8 files off of Napster and hope that one of them was actually a decent bitrate and was the song the title said it was.
Back when eMule was a thing, it was super common to spend an entire day downloading a 700MB video file at 5kb/s, only for it to be Fight Club instead of whatever you thought you were downloading. It's the same thing with music.
"We think there is a fundamental misconception about piracy. Piracy is almost always a service problem and not a pricing problem. If a pirate offers a product anywhere in the world, 24 x 7, purchasable from the convenience of your personal computer, and the legal provider says the product is region-locked, will come to your country 3 months after the US release, and can only be purchased at a brick and mortar store, then the pirate's service is more valuable."
-Gabe Newell
Sauce: http://web.archive.org/web/20120307035423/http://www.escapistmagazine.com/news/view/114391-Valves-Gabe-Newell-Says-Piracy-Is-a-Service-Problem