Spotify is to extend its "free" ad-supported music service to mobile devices.
Smartphone users will be able to build playlists of songs and then hear them played back in a random order. Tablet users will have more control, letting them select specific tracks.
The Swedish firm also announced it was expanding to a further 20 countries, taking its total reach to 55.
Experts said it needed to make the moves to combat growing competition.
Until now Spotify has offered a free-to-use product only on PCs, and had restricted its mobile apps to paying subscribers.
But its founder, Daniel Ek, said bringing a free service to Android and iOS devices would tempt more people to eventually switch to the premium version where they could access higher-quality audio, no adverts and the ability to listen to songs offline.
"Our very clear mission is getting more people to access and discover more great music," he told a press conference in New York.
"Along with more free users there will be more subscribers, and that means more revenue back to the industry."
The firm is dropping the 10-hours-a-month cap it previously placed on long-term users of its free services.
Over the past year Google has rolled out its own subscription Play Music service in several countries, Apple has launched iTunes Radio in the US and Bloom.fm has begun offering subscription packages at cheaper rates than Spotify in the UK.
In addition Rdio has expanded its music-streaming service to 51 countries, while France's Deezer has announced its intention to begin offering tracks in the US next year.
Mr Ek suggested Spotify would gain an advantage over its rivals by offering a product that was free to use and gave device owners control over exactly which songs they listened to.
But one expert pointed out that YouTube already did that.
"YouTube is available on all smartphones with absolutely no premium fee at all, and you get video, social features and lyrics as well," said Mark Mulligan, editor of the Music Industry Blog.
"The labels have always been very keen to keep a separation between the free tier being locked to the PC and premium to mobile, but YouTube has never played by those rules.
"This is about making the playing field more level."
Andy Malt, editor of the industry news site, CompleteMusicUpdate.com. said there had been reports that YouTube had secured licences to begin its own paid music subscription service early next year with ad-free, offline-use features.
"In January we're expecting YouTube to launch its own music service, which may well have a strong mobile offering," he said.
"Also, the long-awaited Beats Music service, from Dr Dre's company will launch in the US the same month and offer strong competition.
"I suspect at this stage Spotify is trying to move ahead of its competitors to try to maintain its dominance in the streaming market ahead of extreme competition. Next year will be a make-or-break time for many."
Spotify also announced it was adding Led Zeppelin's tracks to its library as a streaming "exclusive" and had teamed up with speaker manufactures to allow its premium members to send music wirelessly to their systems.