Spotify, the music-streaming service, is adding a free radio feature in the United States that will compete with Pandora Media for listeners on mobile devices.
Spotify's ad-supported radio function is now available through Apple's AppStore for use on iPads and iPhones, London-based Spotify said Tuesday. Paying users of Spotify's streaming service on the devices can listen to radio without the ads, from marketers including Chevrolet, Heineken and Taco Bell.
Similar to Pandora, Spotify will allow users to create a radio "station" by selecting artists, genres or playlists. The company is betting that free, ad-supported radio will attract users who can be converted later into paying subscribers.
The change will make Spotify, which allows users to create playlists from specific albums and tracks, more like Pandora, a radio-like service that is cheaper to operate because royalty rates are lower and set by Congress.
Spotify has content deals with Sony's Sony Music, Vivendi's Universal Music, EMI and Warner Music. Under those agreements, artists, record companies and publishers receive a cut of ad sales and subscriber fees.
Pandora doesn't have agreements with record companies. Without legislation in other countries, the Oakland, Calif.-based Pandora has been unable to expand outside the U.S.