Each of these three main sticking points in the new policy can easily be explained or avoided, and luckily for you, there's absolutely nothing to worry about. Thanks to an unnecessarily heated Twitter debate with Minecraft creator Markus Persson (yes, you read that correctly), we now know directly via Spotify CEO Daniel Ek that the Spotify app will only ask to use photos and contacts, which can be opted out of, to set custom images on playlists or profile pictures. Additionally, contact info will only be used as a way to find other friends on the service based presumably on their email addresses and names. To put this into perspective, the Twitter iOS app uses both of these permissions as well, and only seeks approval if the user actively tries to seek contacts or post photos via the service. Based on Ek's assertions, the privacy-conscious Spotify user who only tries to listen to music on the app will be able to easily avoid allowing these permissions.
As updated in the original WIRED piece, the location tracking element of the new policy ties in directly with Spotify's features for runners, called Running. The app is able to track a run and match the runner's pace to the BPM of their music in order to make a custom playlist. These playlists are designed to keep the runner's heart and pace at a steady rate as they finish their workout.