The Oakland-based Internet radio company did not release details about the actual cost for the lower-priced service Tuesday, saying only that it would be "mid-priced." The new services will launch before the end of the year, the company said.
The new subscription service will give users control over which songs they hear. Currently, Pandora users can't select songs or albums to listen to on demand. Instead, users choose artists or songs they like and Pandora puts together a playlist inspired by those choices. An ad-free subscription service, called Pandora One, costs $5 a month.
Pandora is stepping into a fiercely contested environment. Spotify already has 30 million paying subscribers. And Apple Inc.'s music service, which launched last year, has 17 million. About 4 million subscribers pay for Pandora's ad-free service. Its total listeners have fallen to 78.1 million in the second quarter, down nearly 2% from a year earlier.
Also on Tuesday, Pandora announced licensing deals with Sony Music, Universal Music Group and several independent record labels. It is still in talks with Warner Music Group and hopes to reach an agreement with the major label by the time the new services launch, it said.
Pandora declined to say Tuesday during a conference call how the on-demand subscriptions will work or how they will stand out from what is already offered by rivals.
Shares of Pandora fell 1.3% to close at $14.10.
1:55 p.m.: This article was updated with the stock's closing price.