Can Spotify Unseat Pandora in US as Top Music Service?

Watch your back Pandora, here comes Spotify.

Comparing Spotify and the Pandora music service isn't fair because beyond the fact they both play music they are different in significant ways. Pandora is more like a traditional radio station that uses the Internet as its broadcast signal. Spotify, a desktop software app, is an on-demand-music service with a library of 15 million songs. With Spotify you create playlists and sit back and listen.

But what they both share is a desire to be the preferred online music service. The popular Pandora, with 36 million active users, is the online service that stands to lose the most here in the U.S. from the invasion of Europe's widely admired Spotify that launched this week in the U.S.. Of course there are other services here in the U.S. such as Grooveshark, Rdio, MOG, and Rhapsody. But the real match to watch will be Pandora versus Spotify as they slug it out for online music domination.

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Right now Pandora owns 60 percent of Internet radio market, according to Pandora's own estimates, and has won legions of loyal listeners with its The Music Genome Project helps Pandora customize a continuous music stream to your personal tastes based on one song's musical attributes. Spotify is similarly popularity in Europe where it's the hottest streaming service with 10 million users. Spotify's secret sauce is good audio quality (360kbs), playlists that can be shared with and added to by friends, a fast search engine for finding your favorite tracks, and a slick easy-to-use interface.

Both offer free ad-supported versions of their services along with ad-free versions for a monthly fee. Both have huge archives of music available for you to stream, and artist biographies to let you learn more about what you listen to.