Pandora Lowers ‘Free’ Limit

Pandora is betting more listeners will pay for its Internet music service.

The company is imposing a 40-hour-per-month limit to its free service.

Founder Tim Westergren says in a blog post that most listeners will never hit the limit, which is expected to affect less than 4% of its total monthly active users.

Why has Pandora made this decision? Higher music royalty rates prompted the move. Pandora’s per-track rates have increased more than 25% over the last three years, including 9% in 2013.

Without something changing, those music royalty rates are due to rise 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,” writes Westergren. 

Pandora has been lobbying for lowered music royalty rates, to keep its rates on par with other digital music services like satellite radio and cable music audio services.


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