Pandora to Limit Unlimited Free Listening

Royalty rates blamed for new restrictions

   

Pandora to Limit Unlimited Free Listening

Pandora185 Pandora to Limit Unlimited Free ListeningStreaming music service Pandora (NYSE:P) is limiting non-subscribers’ time on the service.

In a blog post, Pandora co-founder Tim Westergren announced that starting in March, those who use the service for free on mobile devices will only be able to listen for 40 hours each month.

The company blames the move on the higher royalties it pays. Pandora says its per-track costs for royalties have increased 25% over the last three years and that it anticipates another 16% increase during the next two years. Thus, it needed to limit the costs it incurs when users listen to music — and generate royalty costs — who aren’t paying a subscription fee.

In a blog post, Westergren says, “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.”

Pandora is going to pains to point out the decision will only impact less than 4% of its active users. It says that an average user accesses the site for less than 20 hours across all devices — mobile and otherwise — each month.

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Article printed from InvestorPlace Media, http://investorplace.com/2013/02/pandora-to-limit-unlimited-free-listening/.

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