Pandora shares were off more than 6 percent earlier today, now down over 3 percent on news of a new rival from Spotify.

The streaming music service is launching a new web radio service for mobile devices, which takes direct aim at Pandora’s business model.

This service is free—until now only Spotify’s web service was free, while mobile access required a $10 monthly subscription.

And until now Spotify focused more on letting people curate playlists, rather than listen more passively to ‘radio’ style channels. Now users can save individual tracks to playlists, plus unlimited streaming radio stations.

Spotify’s new mobile app will be free and ad supported, but its goal is to convert those listeners to paying subscribers, offering a paid option with no ads. Spotify and Pandora take two different approaches to curating streaming music into “radio” stations.

Pandora analyses music you like to suggest similar songs, while Spotify focuses solely on social recommendations—the music people who like your music also like.

“Internet radio is a feature, not a business,” writes BTIG analyst Richard Greenfield in a note this morning. He predicts Spotify will rise meaningfully in the Apple iOS store as the radio service rolls out.

P News & Analysis

 NYSE stocks posting largest volume increases - 20 hrs ago

 S&P Closes Lower For Third Session; Dow Gains - 21 hrs ago - CNBC.COM

 Gold Settles Lower, but Posts Weekly Rise - 22 hrs ago

 Most active New York Stock Exchange-traded stocks - 24 May 2013 EDT

 Pandora Media shares rise on strong 1Q results - 24 May 2013 EDT

 More P News