Pandora takes the first step toward on-demand streaming with $5 ad-free option

Pandora is launching a new version of its $5-a-month ad-free radio streaming service, the company announced Thursday.

Pandora Plus, an upgrade to the longstanding Pandora One, will still be formatted as a radio option. The new offering will include unlimited skips and replays as well as an offline listening option. It's not immediately available, but will be slowly rolling out over the next month.

Unlike competitors Spotify and Apple Music, Pandora Plus will not offer on-demand streaming, where users can pick exactly which songs they want to listen to.

But Pandora CEO Tim Westergren said in a statement that on-demand streaming would arrive "later this year."

"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," Westergren said.

Pandora Plus instead improves on Pandora One, which already offered an ad-free radio service for $4.99 a month. That service, however, still limited the number of times a user could skip or replay songs.

Pandora's flagship offering is still its 16-year-old free radio listening service.

The company said Thursday it would introduce changes to its ad-supported, free tier as well. To skip more songs, users can opt to watch a video ad.

The new features are a warm-up for Pandora's big launch later this year. The Wall Street Journal reported in August that Pandora planned a $10-a-month option that would closely resemble other streaming services.

Pandora draws about 80 million monthly active users.

Pandora Plus launches Thursday, and changes will roll out to iOS and Android users in the coming months. Pandora One users will be migrated over to the new service.