Once treated like kryptonite by the music industry, digital distribution is now seen by musicians—and investors—as a welcome opportunity to reach millions of listeners.
Global digital music is now a $5.8 billion market, up almost 10 percent in 2012. The music subscription services sector gained 62 percent in value in 2013 from the previous year, according to a report from IFPI, a recording industry trade organization.
"I believe in on-demand streaming," said Armin van Buuren, recently voted the world's top DJ by DJMag. "Why is the business model so brilliant? With Spotify and a lot of other streaming media, every time you play a track, the artist gets paid for it."
(Read more: Radiohead's Yorke: Spotify a music industry creep)
Companies like SoundCloud, Spotify and Songza are capitalizing on the digital phenomenon. SoundCloud alone reaches more than 200 million unique listeners a month and has 40 million registered users, an reach that lends itself well to advertisers.