Spotify takes the axe to its free service – can it now claim to slash music piracy?

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It turns out there really is no such things as a free lunch. Spotify is slashing in half the amount of free listening available to long term users of its service, with listening hours slashed in half from 20 to 10 hours from 1 May. New users will be moved over to this new restricted model in the next six months.

The details of the new service is this: The existing free advertising supported services will still exist as they are today. “Spotify Free” needs an invitation to work but is unlimited. “Spotify Open” – where anyone can just register without an invite – becomes limited to 20 hrs a month, no invite needed.

Brand new Spotify users still get to use the free service as it is today (either Spotify Free or Spotify Open) for the first 6 months, then the capping begins. But users who registered an account before 1 Nov who will see the changes from 1 May.

More detail:

• From May 1st, any user who signed up to the free service on or before November 1st 2010 will be able to play each track for free up to a total of 5 times.

• Users who signed up after the beginning of November will see these changes applied 6 months after the time they set up their Spotify account.

• Total listening time for free users will be limited to 10 hours per month after the first 6 months – roughly equivalent to around 200 tracks or 20 albums.

It’s taken since 2008 to gather just over 1 million people to become paying customers. Presumably many of its five million free-riders will now be forced to actively consider paying for service when these very obvious restrictions come through.

Daniel Ek, Spotify’s co-founder, blogs today that “People are listening to more music and from a wider range of artists than ever before, and are giving up on piracy, which is exactly what we hoped would happen.”

However, this feels like a bad move. In one feel swoop Spotify is reducing its ability to say, with much credibility, that it is out to reduce the amount of piracy. If you can only listen to 10 hrs, and then only five times to one track, how can Spotify claim that it can significantly eat into the massive amount of file-sharing out there?

On the other hand maybe this is what the service needed to shift more people over to paying? Remember the Unlimited desktop-only service costs £4.99 a month in the UK and is ad-supported. Not too expensive. So the alternative scenario is that Spotify really can convert many to paying subscribers, boosting its coffers and perhaps convincing the record companies that it is clear to land in the US.

And there remains the question of whether this move is down to pressure form the labels – or a product driven move.

However the signs that this could back-fire are already on Ek’s blog post.