Spotify is readying a Pandora-like online radio service for the U.S, according to reports surfacing overnight. The move is an extension of Spotify's aggressive growth strategy which, while having netted 10 million users worldwide, is dwarfed by Pandora's 150 million registered in the U.S. alone. Set to launch before the end of 2012, Spotify is already informing content partners of its online radio plans.
Spotify currently has some radio-like features, but this new offering would go straight after Pandora according to Bloomberg News. Spotify has refused to comment on the reports.
Adding a Pandora-like service has many advantages for Spotify. First, it gives Spotify users access to songs by artists like the Beatles and others who have not allowed on-demand streamers access. Second, online radio roaylty rates are generally lower than for on-demand, giving Spotify a cheaper way to bring users into its ecosystem and serve current users. Both are essential to Spotify's free-to-paid freemium subscription model.