Spotify Ltd., the music streaming company, plans to offer a free advertising-supported service for mobile devices in the U.S. and other countries, according to three people with knowledge of the situation.

Spotify will provide details at a press event on Dec. 11 at its New York offices, said the people, who requested anonymity because the plans aren’t public.

The free mobile service with ads will let Spotify attract more users who can potentially be converted into paying subscribers, said the people. New agreements with music companies give the Stockholm-based company flexibility to develop additional features, the people said, as it competes with Pandora Media Inc., Apple Inc.’s iTunes Radio and planned products from Google Inc. and Beats Electronics LLC.

The record-company deals also let Spotify expand the free mobile service into new territories, including developing countries, the people said. The company’s existing U.S. mobile service relied on the same statutory license as Pandora, making it subject to fixed royalty rates and restrictions on programming.

Kenneth Parks, chief content officer for Spotify in New York, declined to comment.

Pandora, based in Oakland, California, fell after The Wall Street Journal reported on Spotify’s plans earlier Thursday. The shares closed little changed at $29.36 in New York.

Spotify also offers a free ad-supported service on computers and a $9.99 monthly ad-free plan on mobile and other devices.

Spotify lists more than 24 million active users and 6 million plus paying subscribers. The closely held company, founded by Daniel Ek, operates in 32 regions, including the U.S., U.K. and Hong Kong, according to its website.