Is Spotify attempting to reduce their reliance on advertisers? After cutting down last May on the amount of free music that users can access, capping it at 20 hours per month, Spotify has just announced that they are now planning to halve that number to just 10 hours of free listening per month. Plus, users will be allowed to play a track only five times. “It’s vital that we continue offering an on-demand free service to you and millions more like you, but to make that possible we have to put some limits in place going forward,” Spotify explained on their website.
Despite Spotify’s claims that they make “millions” in advertising, this new move suggests that their free ad-supported version might not be as successful as they've made it out to be. In the past, ad-supported music services like Pandora have often struggled to make a profit, and many have ended up shutting down completely. So if Spotify can force more of their users to purchase a paid subscription and have fewer customers using the ad-supported plan, their reliance on advertisers could lessen significantly.
Other theories behind Spotify's reasoning suggest that the changes are related to Spotify’s impending launch in the United States, and that the service is making a concession to American record labels who would undoubtedly be wary of unlimited access to their music. In addition, capping the amount of downloaded music would reduce bandwidth, which would likely soar as Spotify expands. But Spotify rejected both of these explanations, telling PaidContent that “It’s not due to bandwidth issues and it’s not a premium conversion strategy - we want to make that extremely clear. It’s not related to the U.S. launch,” and didn't elaborate further.
The new rules will begin to affect new users after six months, and will kick into effect for current users (who signed up prior to November) on May 1.