Spotify and Pandora Go Head-to-Head in Internet Radio SMACKDOWN

The U.K.-based music streaming service Spotify Ltd is stepping on Pandora’s (NYSE:P) turf by announcing a free radio service available on mobile devices to U.S. listeners.

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Spotify said in a statement that the radio function, which also features ads, is available today on Apple’s (NASDAQ:AAPL) AppStore for use on iPads and iPhones.

The service allows users to set up a customized “radio station” made up of their favorite artists, playlists, or genres, and is similar to Pandora in this respect. The ad-supported radio service will feature ads by companies such including Chevrolet (NYSE:GM), Taco Bell (NYSE:YUM), and Heineken. Spotify hopes to convert the free listeners to paying subscribers to its streaming service.

“We feel like the radio experience of just hitting play, leaning back and not controlling exactly what plays is core to a great music experience,” said Charlie Hellman, vice president of product at Spotify.

Spotify is moving to take advantage of lower royalties, fixed by the government, and applicable to radio-like services in the U.S. The company also has global ambitions and is collaborating with its music label partners, which include Sony, Vivendi, EMI, and Warner Music Group, to extend the service to other countries across the world.

The free Spotify radio service plays two to three minutes of ads per hour of music, while users are limited to skipping six songs every hour. On the other hand, paid Spotify subscribers hear no commercials and can skip songs at will.

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