Spotify’s Next Launch: Usage Restrictions…

Will this drive even more subscriptions, or drive users away and kill the buzz? After a six-month honeymoon in the US, Spotify’s freebie users will soon start experiencing something unfamiliar: usage restrictions.  And it was all spelled out in the terms of service during launch in mid-July:

So, unlimited will start to shift towards limited over time, until a large percentage of free users are faced with a decision: pay, remain heavily-limited, or bail.  Spotify has confirmed that the shift will start rolling January 14th (next Saturday), though there could be some modifications in the exact limitations themselves (hours, unique plays, etc.)  The two payment options are Spotify Unlimited, at $5 per month, and Spotify Premium, which ads offline access and portability for $10.

A similar thing happened recently in Europe, and the number of paid subscribers started spiking.  But this time around, Spotify is totally Facebook-integrated, with lots of users sharing plays and drawing others in.  So what happens when that freebie party ends?

Spotify has been cagey about revealing its broader user number, pegging it ‘well north of 10 million,’ though we’ve heard something substantially greater.  US-based figures are not broken down by the company.

And how many are actually paying?  At last count, Spotify’s US-based premium subscriber level was 250,000 in the US, with Forbes recently pegging the number at 400,000 in a fawning profile.   The company counts approximately 2.5 million subscribers worldwide (as of a few days ago).

Sounds like a lot of freeloaders, but free users have value, even if they’re expensive to maintain. They spread their listens on Facebook, they share playlists, they tell friends, and they – potentially – cause others to sign up.  It’s a network effect loosely codified as ‘freemium,’ and it’s about to undergo a serious shift at Spotify.