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It would be better if there was a better value proposition, instead of “pay to get what we removed”.

It’s not as though free users listening with the app in the background is somehow an additional marginal expense as opposed to them listening with the app in the foreground.

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It actually is a marginal expense. There are two main reasons.

For music videos there are different licensing terms for listening vs music videos. So if they don't appease the licenser than their contract will be less favourable.

And of course ads will pay less for people who aren't looking (although his is technically lost revenue, not an expense).

It actually is an addition marginal expense. They have to pay for infrastructure and possibly licensing fees.

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