Here are a few of the more egregious ways Spotify plans to start snooping on you in the name of streaming music.
Going Through Your Contacts, Photos and Media Files
Tracking Your Location
Depending on the type of device that you use to interact with the Service and your settings, we may also collect information about your location based on, for example, your phone's GPS location or other forms of locating mobile devices (e.g., Bluetooth). We may also collect sensor data (e.g., data about the speed of your movements, such as whether you are running, walking, or in transit).
Following You Around on Facebook
You may integrate your Spotify account with Third Party Applications. If you do, we may receive similar information related to your interactions with the Service on the Third Party Application, as well as information about your publicly available activity on the Third Party Application. This includes, for example, your "Like"s and posts on Facebook.
(This one, at least, you can disable by logging into your preferences and disconnecting Spotify from your Facebook account)
Storing (and Sharing!) Your Credit Card Information
If you sign up for a Trial (as defined in the Terms and Conditions of Use), purchase any of our Paid Subscriptions (as defined in the Terms and Conditions of Use), or make other purchases through the Service, your credit or debit card information (such as card type and expiration date) and other financial data that we need to process your payment may be collected and stored by us and/or the payment processors with which we work. We may also collect some limited information, such as your postal code, mobile number, and details of your transaction history, all of which are necessary to provide the Service.
The number one reason Spotify cites for collecting all this data? Improving your Spotify experience, of course!
We may use the information we collect, including your personal information....to provide, personalise, and improve your experience....
Oh wait, I think they mean selling you ads:
....with the Service and products, services, and advertising (including for third party products and services) made available on or outside the Service (including on other sites that you visit), for example by providing customised, personalised, or localised content, recommendations, features, and advertising on or outside of the Service
If your definition of an "improved streaming music experience" doesn't include asking everyone you know if you can share their data with Spotify, or letting Spotify go through your private photos and track your every movement, it might be time to think about switching streaming services. You know, Apple Music just started looking a lot better.