Spotify Said Expanding Pandora-Like Web Radio Worldwide

Spotify Ltd., getting a jump on Internet radio leader Pandora Media Inc., is close to agreements with record labels to offer free mobile radio outside the U.S., said three people with knowledge of the talks.

Spotify seeks to offer ad-supported mobile radio everywhere it operates starting in April, said the people, who sought anonymity because the plans aren’t public. The London-based company said it now offers a Web radio product to mobile users in the U.S. and desktop users in 20 countries.

The company is using free mobile radio to attract customers who may convert to its subscription music service, the world’s biggest. Mobile is key for both companies -- Pandora, for example, draws three-fourths of its audience on mobile devices and hasn’t expanded beyond the U.S., Australia and New Zealand.

Spotify’s markets include the U.S., U.K., Sweden, Germany, France and Australia, according to the company’s website. The service has 20 million free users and about 5 million who pay $10 a month to access unlimited, commercial-free music on computers and mobile devices.

The company is also seeking to add new territories in its talks with music publishers and record companies including Vivendi SA’s Universal Music and EMI Group, as well as Sony Corp.’s music business and Warner Music Group., the people said.

Graham James, a spokesman for Spotify, declined to comment.

Spotify and Pandora may face competition from services that Google Inc., Apple Inc. and Beats Electronics LLC plan to start this year.

Free Internet radio listeners on Spotify have limited control over song selection and hear advertising. Paying subscribers can create custom playlists and save tracks on devices.

Pandora, based in Oakland, California, fell 1.8 percent to $13.50 at 12:55 p.m. in New York. The stock has climbed 50 percent this year as of yesterday.