Why would you purchase an album or a song if you can listen to it for free, whenever you want? The idea that Spotify leads to a purchase is ridiculous. Especially when you can make your own playlists and play them whenever you like, however many times you like. Artists receive FRACTIONS of a penny for each listen, which amounts to basically nothing.
No, Spotify's business model is not bad for artists, because it allows new artists to reach their audience with their music. Spotify might split up their profits among many artists, but it also allows people to find new artists, without only purchasing the songs they already know that they want. This creates new avenues for artists to find new fans.
Spotify allows artists who woud never get played on the radio to have their music heard across the world. It encourages people to listen to music they would never purchase and in that way, breeds new music fans who buy albums and concert tickets. It is a great way to sell music in today's digital age.