Pandora is raising the subscription price for its ad-free service, saying its own costs have gone up.
The Internet audio service says the royalty rates it pays to performers via SoundExchange have grown “considerably.” Those costs for subscription listening have risen 53% in the last five years and will increase another 9% in 2015, according to the company.
That’s why the audio streamer is adding one dollar to the cost of a Pandora One monthly subscription, to $4.99, beginning in May. That will also be the price for new subscribers.
Existing subscribers will migrate to a discounted price of $3.99 per month at their next renewal period and the company is ending the annual subscription option.
These changes should still allow the streaming audio service to keep Pandora One ad-free, it says.
“Our listeners are our top priority and, while this affects only a small percentage of our listeners (3.3 million subscribers of more than 250 million registered users total), we hope that you understand why we have taken these steps,” says the company in its blog.
In a related action, a federal judge left unchanged the rate that Pandora pays songwriters to license their music, we reported earlier this week. The judge set a rate of 1.85% for each of the five years of the license term, which is retroactive to 2011 and continues through 2015. Pandora had sought to lower the rate to the 1.7% Radio Music Licensing Committee rate for broadcast radio. The American Society of Composers, Authors and Publishers had proposed an escalating rate structure.