Spotify cuts may cause return to piracy

Music streaming service Spotify is to halve the number of free listening hours available to its non-paying members from 20 to 10 and introduce a cap on the number of times each track can be played.

Spotify free service users currently have access to over 10 million songs in the Spotify catalogue, interspersed with advertising, while its 1 million paying members listen advert free.

The service announced new users will, for their first six months of the service, continue to get the current version of the free service, however, after six months the new limits would apply. Users who joined on or before November 1 last year will be automatically subject to the limits as of May 1. Free users who signed up after November 1 last year will get the remainder of their six months before the new terms apply.

The Guardian doesn’t mince its words and points out the new limits are a preparatory step for the US launch to appease music labels and that Spotify has finally signed deals with both Sony and EMI in recent months. Spotify pays royalties to music labels whether or users have paid to listen. Perhaps the cuts will encourage more users to sign up to the premium service and help Spotify reduce its massive losses. Or maybe it will push people back towards piracy.

The October 2010 shuttering of P2P service LimeWire had a noticeable effect on the rate of music piracy. NPD's "Music Acquisition Montior" report shows that illegal music file-sharing activity fell from 12% of U.S. internet users in the third quarter of last year (the last quarter the service was active) to 9% in the fourth quarter after the service was shut down.

Will users switch from free Spotify to the premium version and pay for their music. Or will they go back to file-sharing?