Spotify is a very young company that has managed to successfully enter a market with the highest of barriers to entry, released a technically superb application, and built up one of the most devoted fanbases I have ever seen.
Spotify are still young and they have masses of potential for revenue, I think at this point they just have to have a free service because people dont believe that a service this good could existe, I have a hard time explaining spotify to people that havent used it not because its complicated, just because they dont believe it can work like that.