MUMBAI: Pandora Media Inc. found the market for its Internet-based radio service a little more crowded Tuesday, when rival Spotify said it would launch a new, free offering for mobile devices.

Pandora shares fell as much as 7% Tuesday morning before erasing nearly all of its losses to close down by 2 cents at $11.45.

In a statement, Spotify said it would make its free mobile service initially available via an app for Apple Inc.’s iPhone and iPad. A free version of the service that works with Android-based devices will be released at a later date.

The free service will be ad-supported, and differs from Spotify’s prior mobile offering in which users paid $10 a month to listen to the service on mobile devices. Spotify’s new free offering is similar to what Pandora offers, in that users can listen to music and create stations based on criteria such as songs and artists. Pandora currently offers a free version of its mobile service that is supported by ads, or subscribers can pay an annual fee that does away with ads.