Spotify announced changes to its free service Thursday morning that will add new restrictions on song plays and reduce hours of free listening.
"Above all, this means we can continue making Spotify available to all in the long-term," Spotify CEO Daniel Ek wrote in Spotify blog post announcing the changes.
Spotify has always offered both a free, ad-supported service and paid, ad-free levels of service with added features and mobile access. The free and paid versions will continue to exist, and free users will be able to access all 13 million songs in the catalog. But free users will face new limits.
Here's a quick breakdown of the changes:
-- New Spotify users will be able to use the free service in its current form for up to six months.
-- Changes will take place starting May 1. Any users who signed up for the service on or before November 1, 2010, will be able to play each track up to five times in total. To go beyond five streams of the same song, the user will need to upgrade to an Unlimited or Premium level of service.
-- Total listening time for free users will be limited to 10 hours per month (down from 20 per month) after the first six months.
After these changes are rolled out, Spotify will give away a free 30-day trial of Spotify Premium during the month of May.
The company says these changes are the result of a need to balance its priorities. "We've got an ambition to grow this business," Ken Parks, the company's chief content officer and managing director for North America, Spotify, tells Billboard. "Chief among our priorities is to keep our free service."
These changes beg the question: why is Spotify changing its free service and what priorities are in play? The company would not comment beyond the information in Ek's blog post, but a few likely possibilities immediately come to mind.
First, the changes could be the result of Spotify's need to maintain its licenses with right holders in Europe while pursuing expansion into other markets, namely the United States. The company, which operates its music service in seven Western European countries, has long desired to launch in the states and is said to have run into opposition over the free version of its service.
It's no secret that major labels are wary of Spotify's freemium model. In February 2010, Warner Music Group chairman/CEO Edgar Bronfman Jr. said free streaming is "not a net positive for the industry," although his tone was markedly sunnier in a conference call one year later. And in January, Pascal Negro, head of Universal Music France, proposed that free streaming sites like Deezer should cap the number of free plays of any particular song at four. "Four plays, it's enough to know if you want to buy a title," he said.
Second, these changes could also have financial motives. The heaviest free users are also the most costly because of the royalties they accrue. If the revenue their visits and attention bring do not scale to the volume of music they play, they're a net loss for Spotify. It's a concern for other online services. Just a couple weeks ago the New York Times set limits -- with a few gaping loopholes -- on the number of free articles non-paying readers could access each month. At both Spotify and the Times, some content will be free but the companies are taking steps to get customers to pay to access content.
Time will tell if these changes hurt either consumer adoption of Spotify or the aura that surrounds the beloved music service. In defense of its decision, Ek points out the average user won't reach the five-play limit on seven out of 10 songs, and he argues the changes will affect only the heaviest users. "For those of you using Spotify to find new tracks to enjoy and share with friends, these changes shouldn't get in your way of doing that."