Spotify Plans To Offer “Internet Radio” Feature, Hopes To Sign New Artists

On demand music provider Spotify could soon find itself operating a formal internet radio option, much like the services already offered by the likes of Pandora and Slacker. By creating a more “traditional” radio station via internet connections the company would then be able to gain government-regulated approval for lower royalty rates.

Spotify’s method might also help the company land artists who have shied away from its “on-demand” music approach for fear that lower royalties would hurt their brand. For example while some Adele and Coldplay songs appear on the Spotify system, they have held out when new songs are released for fear that royalty payments and download payments from the likes of iTunes or Amazon MP3 would diminish.

The company’s current proposal would see Spotify radio going live before the end of 2012 and while some partners have known about the company’s plans for a while now, Spotify is refusing to deny or confirm its shift towards a secondary strategy.

One thing is for certain, the reach of Spotify can no longer be ignored as more than 10 million listeners have signed up for the company’s service since in launched in mid-2011. At this time however only three million subscribers pay for the service with Spotify still relaying heavily on ad space to provide artists and labels with a small amount of ad revenue. Spotify’s new approach could attract a larger ad base while at the same time providing a new valuable service for users.

Would you continue to stick solely to on-demand music or do you find value in a Pandora Radio type of offering via Spotify?