After being with Spotify at £9.99 a month since March 2013, I'm now quite settled into its use.
I now do all home listening - or where free Wi-Fi is available - through Spotify on an iPhone which has no SIM card (outdated model discarded by daughter). Sound quality with a decent pair of earpieces is better than I've had with any system in the past.
When out and about I listen to selections from my CD collection, which I transfer to the phone using my laptop and iTunes.
I have built up a Spotify playlist of 600 items, but still buy about one CD a month to cover these situations:
1) Spotify doesn't have an album I particularly want.
2) Spotify doesn't have all of the tracks on an album I particularly like.
As to physical presence/having a library, I find that having a Spotify playlist - I keep this on the computer as an alphabetical order document - fulfills that function. I can quickly select a sought-after item or just browse.
For me, the introduction of streaming services has been a major turning point in my listening history, comparable to the move from 78s (yes, I was around then!) to vinyl, or from vinyl to CD. Seemed largely to miss out on downloads - don't know why.