By Kyle Mammarella

Music-streaming service Spotify is taking aim at rival Pandora with the addition of a radio stations app.

Speaking at the LeWeb’11 conference, Spotify co-founder and CEO Daniel Ek announced a new radio app that was built on top of their platform by the company’s team in New York.  It will be available to both free users and premium subscribers.

This is a departure from Spotify’s regular user experience, which had focused primarily on playlists.  Subscribers were limited to the specific songs or albums that they chose.  Now they can use the radio app to generate a station based on an artist or song.  Users pick the category, but Spotify picks the music from their library of over 15 million licensed tracks.

Ek was quick to note the differences between the new app and Pandora.  “It’s kind of like Pandora, but with unlimited skipping and unlimited stations.”  Pandora permits 6 skips per hour per station for up to 12 total skips per day.  The skip limit helps prevent them from having to pay royalties on a song that a user did not listen to.  “Licensing is one of the most expensive aspects of providing the service, and we must pay the full royalties for a song, even if it only plays for a few seconds.”

The addition of an intelligent recommendation engine highlights the growing importance of music discovery, which Ek admits has been one of the service’s weaknesses.  “Spotify historically hasn’t been good at curating music.”  The radio app will help expose users to new music, similar to the company’s Facebook integration, which lets users see what their friends are listening to.  “Facebook is the greatest distribution platform on Earth,” Ek said.  “When you get the sharing flowing, it really changes how people discover music and how they share it.”

The radio app is integrated into the newest preview version of Spotify, which is available for free via preview version on their website.  As the company’s blog notes “Starting a radio station is easy.  Click ‘Start Artist Radio’ at the top of any artist page or just drag a track to ‘Radio’ in the left sidebar. Spotify will make a radio station of similar music…Your station will keep playing music based on your initial choice, it’s endless. And there’s no limit to the number of stations you can create.”

Ultimately they hope that this adds value for the consumer, translating to higher revenue for the company.  “The more [consumers] engage with Spotify, the more likely they are to pay,” Ek said.  Spotify offers a free, ad-based subscription, as well as premium subscriptions that are ad-free and can be used on mobile devices.

This announcement comes just days after they introduced other new features to their service, including recommendations and editorial content.  Despite all of the momentum they are building, the company claims it has no immediate plans for an IPO.  “We just want to build a truly great company,” said Ek.  “The objective of the company is not to sell the company.”

Spotify has seen considerable growth since it launched in the U.S. in July.  As of October, they have more than five million active users, with two million premium subscribers. Spotify has raised about $120 million in funding  and is valued around $1 billion.

Kyle Mammarella is a New York based artist manager and music enthusiast.

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