Earlier this week, Spotify, the London-based digital music service announced the launch of a free mobile radio service for Apple’s iPhone and iPad users in the U.S. Spotify’s new service is similar to what is already offered on their desktop version and now directly competes with Pandora and Slacker. Even though the new Spotify service will only be launched on Apple products, it still leaves them room to grow, if and when they decide to launch on Android, Windows Mobile and Blackberry.

Spotify’s mobile products were originally available to only subscribers that paid for its premium service, which left those that wanted to use the service for free stuck at their desktops. With the new free mobile service users can select a track that will create a playlist, which can be created from a user’s selection of a particular artist, song, or genre. Where Spotify has a leg up is users can like or bookmark a song, then go back later and listen to that song again.  This is different with Pandora, where it will just play again in rotation and it’s only a sample of the track, when you use the bookmark feature.

Spotify has chosen to stick with the industry standard of only allowing you to skip six songs per hour, however users are already used to this and have been voicing their opinions about it on all social networks. I doubt it will change anytime soon.

The free new mobile service is ad-based. If a user wants a free ad zone they will have to pay $120 a year or $10 a month.  This is a bit pricy compared to Pandora One that is $36 a year and Slacker’s $48 a year.  Spotify is stating that the features outweighs the cost. It can already do what the competition does, however they take a few steps more. Users can pick from a friend’s playlist and add or create their own station. They can also share their songs on Facebook, which now gives them an engaging experience.

Advertisers are already eating it up. Spotify will come with ads from some strong brands such as Heineken, Red Bull, Verizon Wireless and McDonalds. What does this all mean for the advertisers?  Well, think about this.  With all the features that this new service provides and the potential of social engagement that has never been seen with Pandora or Slacker, advertisers no longer have to worry about advertising on a platform seen as a digital version of a Ronco Famous Rotisserie – Where you just “Set it and Forget it.”

Spotify has just opened Pandora’s Box.

Marquis McCoy is a Media Planner / Buyer at The Radio Agency. Please follow The Radio Agency’s Blog “Sounding Board” by subscribing to the email or RSS links above. Visit our website TheRadioAgency.com