Peter Kafka

Recent Posts by Peter Kafka

Spotify Keeps the Free Music Party Going in the U.S.

Good news for American Spotify users who don’t want to pay for their music: The streaming service will continue to let them listen to anything they want, without restrictions, for a while longer.

The free-music party was supposed to end three months ago, which would have meant that nonpaying users would face a 10-hour-a-month cap.

But the company extended the promotion, which it introduced during Spotify’s U.S. launch last summer, and it’s announcing today that it’s extending it again.

Meanwhile, in some European countries, Spotify has also removed another limit on free music — a restriction that meant free users could only hear a single song five times, period — though the 10-hours-a-month restriction still stands.

The various restrictions are a result of negotiations with the big music labels, and are designed to give users an incentive to upgrade their free accounts to premium ones, and/or actually buy music from Spotify or other sources. Paying users get to listen to Spotify without ads, and can access the service from iPhones and Android handsets.

Why lift the limits? Feel free to speculate. Here are two guesses, which aren’t mutually exclusive:

  • Both Spotify and the music labels are pleased with the service’s results, which have been producing free-to-paid conversions of around 15 percent, at least during the U.S. launch. If that’s still working, it may be worth it, from both sides’ perspectives, to lay off the limits.
  • Spotify is in the midst of a giant funding round that could value the company at some $4 billion. That pitch is premised on the company’s “extraordinary” growth.  If it did clamp down on free listening, that growth would presumably slow, which makes that pitch harder to make.

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— Gitesh Pandya of comments on the dreadful opening weekend box office numbers for “The Fifth Estate.”