Spotify extends free unlimited music. But why?

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Nine months after Spotify launched in the U.S., the Swedish digital music company announced that it will extend its unlimited free service -- at least for the time being.

The free service comes with advertising, and Spotify continues to offer a premium, ad-free service that costs $5 a month for computer access to its catalog of 16 million tunes or $10 a month to listen on mobile devices.

So the ‘honeymoon,’ as the company calls it, continues.

That could mean one of two things. The first is that Spotify is so successful at converting free users to paid users that it doesn’t feel the need to start limiting the all-you-can-eat buffet for its non-paying users.

While Spotify does not release U.S. specific numbers, it did update its figures to say that it currently has 3 million paying customers out of 10 million ‘active users,’ that is, people who have logged into the service at least once in the last 30 days.

The second possibility is that Spotify is selling more ads for the free service, making it less of a financial drag on the company. Spotify must pay labels a fee each time a song is played on the free service. The conventional wisdom has been that the ad revenue Spotify receives has not been enough to cover those costs. If that equation has changed, Spotify would have less of a reason to move people on to the premium service.

In Europe, Spotify also rolled back its five-spins-per-song limit, put in place back in April 2011, for Finland, Sweden, Norway, Netherlands and Spain. (The United Kingdom, France, Germany, Austria, Belgium, Denmark and Switzerland still have such limits.) And all 12 European countries continue to operate with a 10-hour-a-month cap. New Spotify users are exempt for caps until after they’ve used the service for six months.

But Americans are getting an indefinite break. Enjoy it while it lasts.

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-- Alex Pham

Artwork courtesy of Spotify.