Spotify plans to offer a free advertising-supported version of its music service for mobile devices, according to three people with knowledge of the situation.
Spotify will provide details at a press event on Dec. 11 at its New York offices, said the people, who requested anonymity because the plans aren't public. Spotify currently only offers a free ad-supported service on computers, charging $9.99 per month for an ad-free service on mobile and other devices.
The new ad-reliant mobile service will let Spotify attract more users who can potentially be converted into paying subscribers, said the people. New agreements with music companies have given the Stockholm-based company flexibility to develop additional features, the people said, as it competes with Pandora, Apple's iTunes Radio and, next year, planned entries from both Google's YouTube and Beats Electronics.
Kenneth Parks, chief content officer for Spotify in New York, declined to comment.
With the new service, listeners will select 15 tracks that play randomly with some ads in between, one person said. If the user chooses fewer songs, Spotify will fill the remaining slots, according to the person. Songs will be available for limited plays, requiring users to create new lists.
The new free mobile service requires a constant internet connection, the person said. Spotify's paying subscribers can store songs on devices for offline listening and aren't interrupted by ads.
The record-company deals also let Spotify expand the free mobile service into new territories, including developing countries, the people said. The company's existing U.S. mobile service relied on the same statutory license as Pandora, making it subject to fixed royalty rates and programming restrictions.
The closely held company lists more than 24 million active users and 6 million plus paying subscribers. Spotify, founded by Daniel Ek, operates in 32 regions, including the U.S., U.K. and Hong Kong, according to its website.
~ Bloomberg News ~