Spotify update will let users listen to music on demand without paying

The company had to sign new deals with labels so that they can give away music without paying

The Spotify banner hangs from the New York Stock Exchange (Getty Images)

Spotify has launched a major overhaul of its free service, allowing people to listen to music on-demand on their phone.

Until now, users of the streaming service who didn't pay could only listen to shuffled songs on the mobile version of the app. But they will now be able to listen to the songs that are in its 15 personalised playlists, which works out at about 750 tracks or 40 hours of music.

The on-demand listening will come as part of a redesigned version of the Spotify app. It will give people the ability to listen on-demand to the songs in many of its biggest playlists.

Users will be able to listen to those limited songs whenever they want, and however many times they want – so long as they are in the personalised playlists. Until now, free users on mobile could choose only to shuffle artists or genres, meaning that it was impossible to listen to specific songs.

The company said that it had worked on new streaming deals with the record labels to be able to give away the songs for free.

At the same time, the company announced a new low-data mode which uses as much as 75 per cent less data. Until now, free users were not able to download music for listening offline – meaning that using Spotify could use up their data allowance.

Free users will be be given access to a special version of the app that shows all of those free playlists when it loads up. It will consist of Spotify's personalised playlists, such as Release Radar and Discovery Weekly, which are based on what people listen to and seem to like.

Spotify's chief product officer Gustav Söderström said that the company thinks of itself as being like broadcast radio in the 90s. In the same way, it can give music away for free, supporting it by running ads, and sending people to record stores, he said.

The update came at the company's first major announcement since it became public. The same event saw a range of new features unveiled, and rumours about its first hardware.

Spotify's free tier has been a point of contention with many artists, and distinguishes it from Apple Music, which charges all of its users a subscription fee. That is thought to be part of the reason why Taylor Swift pulled her music from Spotify but kept it on Apple Music, which the artist suggested was done because the free tier devalued her work.