Pandora Radio will begin to limit free mobile listening to 40 minutes per month, citing rising royalty costs for this change in service. This change will be introduced this week.
Free listening will remain uncapped for users who choose to stream music through their desktop or laptop computers.
“Limiting listening is a very unusual thing to do, and very contrary to our mission so we wanted to share a quick explanation,” said Tim Westergren, co-founder of Pandora Radio in a statement posted on their official blog yesterday.
“Pandora’s per-track royalty rates have increased more than 25% over the last 3 years, including 9% in 2013 alone and are scheduled to increase an additional 16% over the next two years. After a close look at our overall listening, a 40-hour-per-month mobile listening limit allows us to manage these escalating costs with minimal listener disruption.”
Westergren went on to say that the service change will effect less than 4 percent of Pandora’s monthly listeners, and that those reaching the cap on hours will be notified.
Furthermore, listeners who are reaching the cap will have two options available to continue listening. A fee of $.99 can be paid to continue listening for the remainder of the month, or listeners can choose to subscribe to Pandora One for $3.99 per month.
Subscribing to Pandora One allows unlimited listening with no advertisements.
Based on comments to Westergren’s blog post, it appears that listeners are generally being supportive of the company’s reasons for this change in service.
Pandora has seen a great deal of growth in their listener base. They reported 65.6 million active listeners at the end of January, an increase of 38% from a year ago. The rapid growth has caused higher royalty costs for the company.
However, in December the company reported that that its third-quarter profit increased as higher revenue helped offset rising costs, according to TechCrunch.com.
While that is promising news, future forecasts don’t look as bright. Pandora expects losses for the next quarter.
When Pandora was launched 8 years ago, they faced stiff competition from services offered by Microsoft, Yahoo, and AOL. Through sheer determination and big dreams for the future, Pandora emerged as the No. 1 source for internet radio.
With the changes in service ahead, competitors that offer free mobile listening such as iHeartRadio and Slacker Radio may get a new foothold in the internet radio industry.
If you would like to check out the official blog post released by Pandora, here is the link: A note to our listeners
Are you a Pandora Radio listener? What do you think of the changes ahead?
Would you be willing to pay a fee more more listening hours, or would you rather explore other sources of internet radio?
Please share your thoughts in the comments section below!
Photo courtesy of Pandora Radio