This is just the “exposure” argument. Not every client converts to being a paid user. The kind that use free service and then block ads may not convert at a high enough rate to justify providing the service. Especially since it also cannibalizes the other product (paid streaming). The marketing team can then decide they’re not worth it.

It's much deeper than exposure. It's closer to an "ecosystem" model. You're likely to create playlists in a service. You will find channels that you like. You will find that some artists are not available in other services. You will find that an interface is better. You might find their "you-might-also-like" algorithm is better. I tried Google's music system for about a year before switching back to Spotify (the irony being that Google Play Music didn't play well with Google's Assistant if you have more than one Google account).

If you get banned because of an adblocker you didn't know about, assuming you care enough to contact their customer service, I'm guessing they'd unban you.