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Spotify sets new limits on free music

For the last year, the European music service has been slowly reducing the amount of free music available to users. Now it has a fresh set of restrictions.

Update at 4:41 a.m. PT April 14: As first reported by CNET, Spotify is setting new limits on free music. According to a post today on the company's blog: as of May 1, people who signed up for the free service on or before November 1, 2010, will get access to each track for free up to five times. People who signed up after November 1 will see these changes applied six months after the time they set up their Spotify account. Total listening time for free users will be limited to 10 hours per month after the first six months. (CNET's original story from yesterday is below.)

Spotify is considering a plan to further cut back the amount of free music it offers to users and is expected to impose new limits perhaps as soon as this week, sources with knowledge of the plans told CNET.

Spotify CEO Daniel Ek Ian Phillips-McLaren

Spotify, the online music service that has attracted more than 10 million users in Europe in part by offering free-of-charge access to millions of songs, may cap the number of times users can listen to the same song and limit the total number of hours that existing users would have access to its free service, the sources said.

Last May, Spotify capped access to free music for the first time. As part of an offering called Spotify Open, new users were given 20 hours of free song listening per month. If they wanted more they had to upgrade to Spotify Unlimited, which offers all-you-can-eat listening for a monthly fee.

Whatever changes Spotify makes would go into effect sometime in May, said the sources. A Spotify spokesman was not immediately available for comment.

Spotify is perhaps best known in the United States as the music company that has had trouble launching in this country. The company has penned U.S. licensing deals with two of the four major record companies but can't seem to lock down music rights from Universal Music and Warner.

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If and when it does launch here, managers have already agreed to limit the amount of free music it offers, sources told CNET in February.

The limits on free music appear to be designed to push people into paying for music. Ad-supported music services have struggled to generate profits and prove their business model. Even Pandora, the online radio service that started out paying the bills primarily through ad sales, has placed caps on free music.

Still more ad-supported services flamed out and shut their doors, including Ruckus, SpiralFrog, and Imeem. For all of Spotify's notoriety and big European following, the company has not been able to show that it's able to generate big revenue or profits.