Earlier this month, news came that Spotify was cracking down on users who were running modified versions of the Spotify app to stream music for free while blocking ads. At that time, it seemed that there were only a few users, but it turns out that the number is a bit higher. Spotify's IPO presentation noted that approximately 2 million users are receiving Spotify advertising without paying, as noted by Reuters.
At the end of 2017, Spotify reported that it had 157 million active users, of which 86 million were unpaid subscribers. Consider the 2 million users who pirate the Premium service-avoiding additions, and that's about 2.3 percent of Spotify's free users with modified apps or accounts.
That's a big problem, as Spotify points out in its IPO presentation. Free users who steal what amounts to their premium service without paying for it could increase Spotify's costs for the company without providing a corresponding increase in revenue (in view of ads or premium subscription rates). And unlike most free users, which Spotify hopes to convert to paid customers over time as a key part of their business model, users with modified versions of the application are less likely to become Premium subscribers.