Spotify and Pandora are free services that allow users to listen an unlimited amount of music for free. By allowing free streaming for everyone there is no incentive to purchase music anymore. The lack of revenue coming in will hurt the economy. We will never be able to go back to the days where you had to purchase a whole CD album at the store to listen to the work of an artist.
Streaming sites such as Spotify have generated more revenue for my label of recent than the selling of traditional audio tracks has for years. Perhaps the large labels may be suffering, but that is not the case for some of us small independents. Perhaps that is because indie labels are much more flexible than the large major labels. The large labels are pumping out very stylized, formulaic, over-produced albums these days anyways. I personally would be pleased if there was less mainstream music being produced by the big labels anyways.
Whenever a new technology or device is introduced people always ask that if it pertains to the arts. The answer is no, it won't destroy music. That is rediculous, since making music more available would promote a medium long before it harms it. No no, the question should be, rather, "Will music streaming sites such as Pandora and Spotify destroy music industries?" By this I mean will it change how music is consumed and thusly make certain methods of obtaining music outdated? As an example the only way you could watch a movie at home would be to buy a projector and the movie's film, at least a copy of it. Then in the 80's, when home TV sets were almost mandatory, places like Blockbuster allowed the rental and purchase of movie tapes and VCRs (as well as Laserdiscs, Betamax Tapes, even CEDs, and eventually DVDs). Then in the 2000's, with the rise of Netflix and Hulu, video rental stores struggled to keep up with the instant streaming of movies online. But these streaming sights also made many more movies available to more people than the stores did. So no, making an art form more available won't kill the art form, just the previous means of making it available will be more obsolete.
I'm sure that people made similar claims about radio stations that played music. They made similar claims about MTV, I'll wager. I believe that it will actually help. You have a service that allows you to listen to any song you like. If you like a song, you can buy it and download it. This also allows new artists to get their music out there, where everyone can listen to it. And if I'm not mistaken, you need a paid membership to download their music. A part of that goes to the artist of whatever songs are downloaded. It's a win win situation.
Just as we have seen any new medium change the music industry (Records, Tapes, CDs, Mp3, the Apple Ipod, and now Internet Radio and Music Streaming), streaming will do the same. I can't say what change- hopefully one that will create a more diverse scene, but you cannot have intense diversity while still maintaining a popular music industry (referred to as "the industry"). There will always be a specific taste that the majority has, and streaming will not change that.
This is all assuming that the question was referring to the music industry, since music in and of it's nature cannot be destroyed or broken apart. Suppressed, but not gone or destroyed.
Spotify and Pandora have the potential to deal a heavy blow to the major labels who's strategy is not to find creative and talented artist and help them create the best music possible. There strategy is to manipulate people by controlling the radio and television and making tier musicians into brand name products not artist. They count on people following trends and not actively looking for new music. Pandora and spotify take some of that power away from them and help smaller artist get discovered.
Throughout the years there have been several P2P programs that have come and gone, and piracy is still a major factor in music sales. Artists need to become more creative in how to make their money and distribute their music. Streaming sites are the perfect alternative as they encourage paid subscriptions and offer users many features to discourage piracy. Perhaps if streaming sites upped their anty on their offerings to the record labels we'd see a bigger rise in the success of these companies.
Listening to the radio it is evident that there exists a trend in which most stations overplay most new songs to the point where they actually make them undesirable. Pandora and Spotify allow users to get a wider selection of music, as well as new and less mainstream songs. These two streaming sites, as well as others, may hurt the radio's popularity, but it allows for less known artists, bands and groups to get more coverage.
Music streaming sites, like Pandora Internet Radio and the all-you-can-eat model pioneered by Spotify, cannot "destroy music," but have and will force the industry to adapt its practices. In order for these services to be a positive force in the industry, they need to raise the rates they pay artists and copyright holders based on each individual stream.