Spotify reveals 2 million free users are dodging ads

Some non-paying customers have figured out how to access subscription perks. Photo / 123RF

Music streaming service Spotify said on Friday about 2 million of its non-paying users were suppressing advertisements, highlighting a potential revenue risk for the soon-to-be public company.

Spotify had 157 million active users as of December 31, of which about 71 million were paid subscribers who access ad-free versions of the service.

Just weeks ago, the firm warned that it would be cracking down on users who rely on hacked apps to get around advertisements without paying, threatening to suspend or ban those who are caught, according to the Daily Mail.

In a regulatory filing, Spotify said it previously included the 2 million users in calculations for some of its key performance indicators, including MAUs, ad-supported users, content hours, and content hours per MAU.

The streaming music leader had filed this week for a direct listing of its shares, instead of a traditional IPO.

The direct listing will let investors and employees sell shares without the company raising new capital or hiring a Wall Street bank or broker to underwrite the offering.

Through Spotify's "freemium" service model, users have access to basic features without paying a subscription.

This includes shuffle-only play, and periodic advertisements.

By subscribing, around US$9.99 per month for a single user, a person can listen ad-free, among other perks.

But, some users have figured out how to work around this model, using so-called hacked aps to access the premium features.

Spotify has been criticized in the past for what seemed, to many, as turning a blind eye to the use of hacked software, which allowed users to access subscription perks without paying.

But, at the beginning of this month, it appeared the firm was tightening its grip.

As reported by TorrentFreak, some Spotify users have begun to receive emails from the company warning them about "abnormal activity" linked to their accounts.

In an email sent to offenders, a spokesman for Spotify said: "We detected abnormal activity on the app you are using so we have disabled it.

"Don't worry – your Spotify account is safe," the email continues.

"To access your Spotify account, simply uninstall any unauthorized or modified version of Spotify and download and install the Spotify app from the official Google Play Store

"If you need more help, please see our support article on Reinstalling Spotify.

"If we detect repeated use of unauthorized apps in violation of our terms, we reserve all rights, including suspending or terminating your account."