Spotify is planning to launch a radio service similar to Pandora. According to reports Spotify is smooching with potential content partners already.
At Spotify it’s the users themselves building lists which could be fed into a radio stream, at Pandora it’s an automated recommendation system that starts streaming stuff as soon as you gave the system a hint in terms of genre, artist or alike, but you cannot build track lists yourself.
Streaming radio has two big advantages – you can advertise like a regular radio does (and not spoil a learned radio experience) and licenses for online radios are cheaper. If you stick to content deals with individual labels, like Spotify still does, you cannot play songs from labels with whom it doesn’t have a relationship as well as it’s a complicated and work intensive way of doing things.