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Spotify becomes free – but caps listening hours

Spotify is slashing the cost of its ad-free music streaming in a move to win more paying customers.

Spotify was formed in 2006 by Swedes Daniel Ek and Martin Lorentzon.

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Swedish music service Spotify on Tuesday unveiled a new pricing plan and removed the need for an invite to join the service. But new free users will have their listening time capped.

Since the launch 2008 Spotify, legally offering instant access to millions of tracks with P2P technology, has been struggling to make its business model work.

In March Spotify said it had 320,000 premium users, but the company told the BBC Tuesday that the number was now significantly higher. However, the number of premium customers, paying €9.99 a month, has not been enough to cover the costs of servicing all the free users and paying licensing fees to artists.

In a move to boost revenue two new pricing options are now being launched, called Spotify Unlimited and Spotify Open. Unlimited gives advertisement-free access to Spotify on the compute for €4.99 per month. Open will be a free, ad-supported version of Spotify, giving new users access to the music catalogue for 20 hours a month.

“We’re really excited to offer more choices for users and existing users who are happy with their current plan won’t be affected by these updates,” said Andres Sehr, Spotify’s global community manager on the company’s  blog.

Last month Spotify upgraded its service with the addition of several significant social features, including a ‘Spotify Music Profile’ and Facebook friend integration tool.

“Following Spotify’s major upgrade, we wanted to give music fans new ways to enjoy the service. Now everyone who wants a great introduction to Spotify without an invite, or who wants to enjoy unlimited, ad-free music just on their computers, can do so", said Daniel Ek, CEO and founder of Spotify.

In Sweden music sales increased last year for the first time in a decade - mainly on the back of better legal alternatives such as Spotify. Streaming services accounted for 46 percent of all legally downloaded music last year, up from 17 percent 2008. 

The music service currently has some 7 million members across Europe and is expected to be launched in the US and China. 

Last Updated (Wednesday, 19 May 2010 08:25)


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