The marketing move of offering an unlimited plan reveals that storage and traffic are not that expensive and someone made a choice that light users will subsidize heavy users. With that, hiding your data from you and subsequently deleting it, at least without first encouraging you to download it within some post-downgrade grace period, would be a choice, not necessity, and is user-hostile.

If it is an actual necessity—a service chose to market an unlimited plan to attract more users, and then realized they are losing money on storage and traffic so much that they would unapologetically burn bridges with existing users who showed themselves as willing to pay (who maybe needed to downgrade temporarily for whatever reason) with the above move—and yet their strategy is apparently to keep offering that plan (in hopes to turn things around with more light users joining?), I would question whether that service has serious issues with even medium term planning.

Overall what Im saying is they treat their non-paying customers better then their paying ones. Once I was a paying customer after having and using my free account for over 7 years then converting to a paying customer and having to cancel Soundcloud became hostile.