Spotify Working on Internet Radio Service to Challenge Pandora

According to insiders, Spotify is developing an Internet radio service in the United States that would challenge Pandora, Bloomberg Business Week reports.

The format would be similar to Pandora’s, whose royalty rates are lower and set by Congress. Spotify has reportedly begun to notify some content partners about the plan. The service could launch by the end of the year and would be supported by advertisers. 

Internet radio for Spotify would attract new users to the free service with the hope that they would later become paying subscribers. There is also speculation that radio would allow users access to artists who are withholding some, if not all, of their music from Spotify (such as the Beatles and Black Keys).

Spotify spokesman Graham James, however, told Bloomberg, “We have no announcements to share at this time.”

Spotify recently announced that it had 10 million registered users and 3 million paying subscribers worldwide. Pandora’s user numbers are up as well, reaching 51 million in March, up from 32 million last June, according to Billboard.biz.