Popular online internet radio destination Pandora announced yesterday that they’ll be placing a cap on free unlimited listening to the service. As of this week, listeners will be limited to 40 hours per month of free listening on Pandora. After the limit is reached, listeners will have the option to pay 99 cents to listen for the remainder of the month or subscribe to Pandora One, which costs $36/year.
In a note on the company blog, Pandora founder and Chief Strategy Officer Tim Westergren explained that only 4% of their active users hit the 40 hour mark, and the reason they’re capping listening is that the royalty rates they’re currently paying are continuing to increase. It all makes sense, and active listeners that use the service daily probably won’t object to paying a bit for the service, if they aren’t already. And while the more casual listeners probably will never hit that mark anyway, there are probably some that are tuning out now just on principle. Westergren’s blog post is after the jump.
A note to our listeners
This week we will begin communicating directly with a small number of our listeners as we introduce a 40-hour-per-month limit on free mobile listening.
Most of you reading this will never hit the limit. In fact, it will affect less than 4% of our total monthly active listeners. For perspective, the average listener spends approximately 20 hours listening to Pandora across all devices in any given month.
That said, limiting listening is a very unusual thing to do, and very contrary to our mission so we wanted to share a quick explanation. 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.
For listeners who do hit the limit, we have a variety of options available to keep the music you love flowing. Listen for free for as many hours as desired on desktop and laptop computers; pay $0.99 for unlimited listening for the remainder of that month, or subscribe to Pandora One for unlimited listening and no advertising.
In short, this is an effort to balance the reality of increasing royalty costs with our desire to maximize access to free listening on Pandora. We will be sure to alert any of our listeners that start getting close to the 40 hour limit. As always, your feedback is welcome.
Thanks for listening,
Tim (Founder)
