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Spotify Developing Online Radio Service (Report)

Spotify Logo Green - H 2011

The offering, which could launch later this year, would put it in direct competition with Pandora.

LONDON - Spotify, the online music provider based here, is working on a U.S. Internet radio service that could launch by year-end and would challenge Pandora Media, Bloomberg News reported, citing  people familiar with the situation.

Spotify’s current offering works like a music collection that allows people to create playlists, while  Pandora functions like radio. Pandora's approach is cheaper to operate as royalty rates are lower and set by Congress, according to Bloomberg.

The new Spotify offering would be advertising-supported, but could be used to attract users who may later become paying subscribers.

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

Privately held Spotify has about 10 million registered users worldwide and 3 million paying subscribers, compared with Pandora's 150 million registered users. Pandora focuses its operations on the U.S.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai