Spotify is already enjoying success with its current online music service, which functions like a music collection, allowing users to create playlists from specific albums and tracks. Not content to stop there, the London-based company is reportedly working on another format, which, like rival music service Pandora, would operate like radio.
“The new service would start by year-end and be supported by advertising, said the people, who weren’t authorized to talk publicly,” Bloomberg reports. The new, would-be service would already be cheaper to operate than Spotify’s existing service, because royalty rates are lower and set by Congress, Bloomberg notes. What’s more, “An online radio offering would advance Spotify’s strategy of attracting users with free, ad-supported services who can be converted later into paying subscribers,” it suggests.
According to Bloomberg, about a third of Spotify users have signed up for paid plans offering unlimited, commercial-free music on computers and mobile devices. According to sources, Spotify has already started notifying some content partners of its impending service.