Spotify’s Daniel Ek has announced restrictions to Spotify’s free edition:

• Users will be able to play any track for free up to 5 times only
• Total listening time for free users will be limited to 10 hours per month

The changes are presented as a necessity:

It’s vital that we continue offering an on-demand free service … but to make that possible we have to put some limits in place going forward.

You can easily escape the restrictions by subscribing to the unlimited service at £4.99 per month (or equivalent in your currency), or the Premium service at £9.99. Unlimited offers music without advertisements, while premium includes mobile and offline music, and a higher bitrate of 320 kbps.

While it is a shame to see free Spotify become less attractive, the free and premium services are well priced. For the cost of one album per month you can play anything on Spotify’s service as often as you like. The main downside is that there are gaps in what is available. Over time, my guess is that either Spotify will win the argument and the business, and those gaps will be filled; or of course it may fail.

Spotify’s problem is that it has to pay even for the music that is streamed for free. That is always a difficult business model, and it seems that advertising is not enough to pay for it at the rates the music companies require.

If the restrictions result in a surge of new paid subscriptions, this may even work out well for the company, though the service is still not available in the USA.

Personally I think Spotify is inherently a better deal than iTunes downloads, for example, which offer an unlimited license but only on a track by track basis and with no resale value. Anyone who still buys music is likely to spend less with Spotify, and to get more choice. The subscription model is the only one that makes sense in the internet era.

At the same time, I can understand why the music companies want to maintain a high price for streamed music. They are playing a high-risk game though, since by making legal music more expensive and adding friction, they make illegal music more attractive.

For example, there is now more incentive for a user to record a favourite track during one of their five free listens, and never pay for it again; or to get the tracks they want from a friend’s ripped CD – both actions that are untraceable.