Internet radio leader Pandora unveiled plans Thursday to challenge streaming stalwarts such as Spotify by undercutting them on price and matching them with on-demand music.
The move comes after prolonged market jitters over the future of Pandora at a time that on-demand streaming is reshaping the music industry.
The company said the new Pandora Plus will include more advanced features to be rolled out in the coming months.
Among them is an automatic switch to offline radio stations whenever a subscriber loses an Internet connection - avoiding the sudden blackouts that remain an annoyance on streaming services.
Pandora said it would launch an on-demand subscription platform later this year. The service, whose pricing was not immediately revealed, would follow the model of Spotify in letting users select any song at any time.
Pandora, whose users overwhelmingly choose its free advertising-backed tier, said it would make the level more interactive.
Listeners will be able to skip or repeat songs if they click on a video commercial - a feature likely to delight advertisers who are crucial to the company's bottom line.
Tim Westergren, the company's co-founder who returned earlier this year as CEO, said Pandora wanted to give users "flexibility" in what they listen to and how much they pay.
"Whether a listener wants to take advantage of our enhanced ad-supported experience, our groundbreaking subscription radio service or our fully interactive on-demand option coming later this year, we have a solution tailored for you at a price point you can afford," he said in a statement.
Pandora later Thursday said it had reached a licensing agreement with Warner Music for the on-demand service, two days after announcing deals with the other two major label conglomerates, Universal and Sony Music, and indie network Merlin.
Pandora share prices closed flat Thursday despite a surge on the US market.
Reviving stagnant growth?
Pandora, launched in 2000, designed itself as a radio network with stations based on genre and, more recently, automatically personalized around listeners' selections.
It had 78 million active users at the end of June - an impressive number, but a slight fall from a year earlier.
Spotify by contrast has posted breakneck growth. The Swedish company said Wednesday that its number of paying subscribers soared by one-third in just the past half-year to 40 million, out of total users of 100 million when including its free tier.
Spotify's audience tends to be younger, while Pandora's strengths include casual listeners and restaurants and businesses looking to create a musical mood.
Global revenue from streaming rose more than 45 percent in 2015 alone, according to the IFPI industry group, leading the music industry to post its first significant growth since the start of the Internet age.
(Also see: Apple Considering Tidal Music Purchase: Report)
Apple Music as well as Tidal, led by rap mogul Jay Z, have sought a bigger slice of the market by promoting exclusives - such as, for Tidal, the latest album by Jay Z's wife Beyonce.
Apple Music, launched by the tech giant last year, recently said it had 17 million paying subscribers - posting steady growth but significantly trailing Spotify.
As for Tidal, the Dagens Naeringsliv newspaper in Norway, where the service's parent group Aspiro is based, this week reported that the company has suffered heavy losses and received around 100 payment default notices.
Unlike the major on-demand services, California-based Pandora has a limited global reach due to complex government regulations.
Outside of the United States, Pandora is only available in Australia and New Zealand where the new features will come out next year.