They were fine with it back in the day. The only difference now is that the free music that the artist uploads can be streamed to people who werent searching for it. I can't even get our music on pandora because we don't have a major distribution deal.
But, in order for it to compete with those bigger ones it's gonna have to have just as much quality music. Not just playing a bunch of random bands crappy demos. Artists aren't just gonna jump at that when we're getting paid at least something for Spotify or Pandora.
Also, you can be distributed by Amazon to get on Pandora. You just have to have all the requirements (CDs, rights, the numbers, etc.) and pay an annual fee to do it basically. Keeps random cbands from all just putting their stuff on Pandora.