Is this the end of Spotify Free?

The launch of two new Spotify services - Unlimited and Open - means two things. One, you don't need to spend a tenner to get rid of the ads; and two, Spotify Free's days are numbered.

It's clear that Spotify Open, which delivers 20 hours of ad-funded music per month, is going to replace Spotify Free.

If you're already a Free user then things won't change in the foreseeable future, and you can still offer invitations to others; however, we wouldn't be surprised if the ability to invite people to Spotify Free disappears fairly quickly.

Check out Spotify's exact words: people are "still able to sign up… by obtaining one of the many millions of invites currently available." The key word there is "currently".

A refreshing admission

On the face of it the inevitable demise of Spotify Free is a bad thing, but we think it's actually quite refreshing. Spotify is basically saying "look, we can't afford to run unlimited streaming for everyone for free, so here's your choice: 25 albums a month for nowt, or as much as you want, ad-free, for a fiver."

The problem for Spotify is that the music business doesn't care whether you're a paying customer or not; it just wants to be paid for the music Spotify streams. In an ideal world the odd advert would cover the cost of the relevant licenses, but this isn't an ideal world. There simply isn't enough advertising cash to go around.

That means Spotify had a stark choice. If it carried on as normal, it would have to find ways to make more money from free customers. That means more ads, more invasive ads, and more attempts to mine personal data from profit.

It's what you might call the Facebook model, and while it works for Facebook - so far, anyway - there's no guarantee it'd work for Spotify. This way is better. The free service isn't too limited, and the ad-free version is now half the price it was previously (Premium remains, but you only need to pay the extra fiver for that if you want offline access or the mobile service).

Where Spotify got it wrong was in having a free service that was just too good, and a paid-for service that was just a little bit too pricey. It's addressed both of those issues, and the result should be an increase in the subscription numbers.

It's a smart move - but it might also be too little, too late. If the rumour mill is correct, a streaming, subscription-based version of iTunes may be launching in just a few weeks time.