Spotify is a legal application. You can find the legal policies when signing to it. This means it is legal to use this app, the song copyright owners have full knowledge. They are paid their total royalties from the music proceeds that were collected from your payments from the subscriptions of the customers. However, the free Spotify modified premium app is against the terms and policies of Spotify limited. Earlier users were sent emails to upgrade to the legal app, and their accounts were suspended in that regard. However, the modified version developers found a way to reverse this. And consequently, it is back with even better features.
The reason this free premium app is being blocked by the original developer ids because the app does not profit the company.