Free unlimited music streaming is no longer available for Pandora’s mobile users.
The company has announced that they will cap free mobile listening at 40 hours per month. Users who reach that limit can pay 99 cents to listen for the rest of the month, or will be encouraged to subscribe to Pandora One for unlimited streaming and no commercials.
The move addresses the company’s difficulties in making money as they face competition from services like Sirius XM Radio and Spotify at the same time that royalty costs are rising. According to a blog post on the company’s website from co-founder Tim Westergren, Pandora’s per-track royalty rates increased 9% in 2013 and more than 25% over the last three years. Royalty rates are also expected to increase another 16% over the next two years.
Companies like Pandora and Spotify, that allow user’s to stream music for free online, pay different rates to license music than traditional radio companies.
The move may seem like it will have a big effect on Pandora users, but according to Westergren, less than 4% of total monthly active listeners will hit the monthly cap. He noted that the average listener spend about 20 hours a month listening to Pandora across all devices.