Spotify challenges Pandora with free radio on iPhone, iPad

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Music streaming service Spotify has announced it is adding a free radio feature to its iOS app that will compete with the likes of Pandora, Slacker and Songza. Previously only available to desktop users, the feature will enable both free and premium Spotify users to create unlimited radio stations based on specific artists, songs, playlists or albums and stream them from an iPhone, iPad or iPod touch.

Those under the $9.99 a month plan won’t hear any commercials and will be able to skip as many songs as they like, while free users will hear two to three minutes of commercials each hour and can skip about six songs every 60 minutes. Also, although Spotify Radio will be available for free and premium users in the US, it will be limited to premium subscribers only in the remaining fourteen markets Spotify supports.

The company is betting that free, ad-supported radio will attract users who can turn into paying subscribers later. The model is also cheaper to operate because it doesn’t require agreements with record companies — which Spotify has for its on demand service — thus royalty rates are lower and set by Congress.

Spotify has about 3 million paying subscribers globally and 10 million registered users worldwide as of November 2011.  Pandora, which was founded in 2005 and has yet to expand outside of the US, has 150 million registered users with 49 million listening within the last 30 days.

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