However, I think what might confuse people in terms of perceived fairness is that with a flatrate, people might listen to a lot more music. But it is a tradeoff between people listening more but paying less per song and people listening less and paying more per song. It's a mistake to think "whoa, if I had sold as many CDs as people listened to my songs on Spotify, I should have received x million $$$." The reality is people probably wouldn't have listened as much without the flatrate.
So in the end all that matters is how much money you receive, not how many times people listen to your songs.
And what have you gained if you limit people to 10 songs per months vs thousands, if they spend the same amount of money? It is only an inconvenience for the audience.
What if, instead of being paid per play, artists were compensated based on the number of unique visitors that played their music? So if one person plays one of their songs, they get paid (for instance) a whole dollar. If one person plays that song 5000 more times, the artist still only gets paid one dollar. But if 5000 different people play that song, the artist gets 5000 dollars. Once. I think this scheme would compensate artists much more fairly, like iTunes, while also providing the cloud hosting and flat monthly fee that attracts users.