Correct. iTunes Radio works like the Pandora model, not the Spotify model.
iTunes Radio is very similar to Pandora - but by selecting the same artists, you get different songs because of the way each handles their algorithms.
Spotify is too expensive for me as well, because I do NOT want to pick exactly who I want to play, I _WANT_ to have a radio-type experience where I find new songs.
Pandora or iTunes Radio both work for me - both find different sets of songs I like. I switch between both now. A few days on one, a few days on the other, then buy songs I really like, which is about 5 a month (~ $75). Still cheaper than Spotify.
For example, classical music, I use this to study/work to. I have absolutely no clue as to what the music is or who makes it (besides generically knowing 'Beethoven' or 'Mozart'). I like to be able to just tune the radio and know there will be good classical music on there, and enjoy.
I respect your opinion too, just note that people listen to music differently.