Spotify is working on a Pandora-like, ad-supported radio service that would launch by the end of the year, Bloomberg reports.
Spotify told Bloomberg it has “no announcements to share at this time,” but:
The new format would be similar to Pandora’s, which operates like radio and is cheaper to operate because royalty rates are lower and set by Congress.
The new service would start by year-end and be supported by advertising, said the people, who weren’t authorized to talk publicly. The company has begun notifying some content partners of its plans, they said.
In the most recent figures released, Spotify said it has 10 million registered users worldwide and three million paying subscribers. Pandora has 150 million registered users.
Spotify already offers a radio feature on its desktop app, but it is not mobile yet.
Bloomberg explains Pandora users “have access to any artist whose music has been published, because the service operates under federal rules. Royalties paid by Pandora and other online radio companies are set by the Copyright Royalty Board, a division of the Library of Congress.” So a radio service would allow Spotify to offer some music it doesn’t have the rights to already, and could also pull needed advertisers to the platform.