From the Spotify blog (via The Verge):
It’s not every day we get to tell you about a great new radio experience in Spotify! Starting today, all Spotify users in the US with an iPhone or iPad can tap into millions of songs for free.
Our latest app features free radio – the only radio where you can save the songs you love. Now you can discover, save and enjoy an unlimited amount of music on the go.
Stations can be created based on any artist, playlist, or album, and Spotify will even suggest additional music for you to listen to based upon what you’ve already chosen. The feature also allows you to favorite “thumbs up” songs you like the most, and add them to a favorites list. That should do a lot to challenge the likes of Pandora.
The new radio feature can be accessed from the existing iOS app for those with premium subscriptions. Certain features, like Radio, will be available through the app to all users, whether they have paid or free Spotify accounts. Unfortunately, the free radio service is only available for users in the U.S.
The update is live now, and can be downloaded for free from the App Store (link).