Listen to Pandora on your phone? You might want to consider getting more music: Pandora’s about to put some limits on the party.
Why? Because they pay too much per song to let you freeloaders use mobile for more than forty hours a month, at least that’s the official line.
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.
Pandora states that this limit will affect less than 4% of its total customer base.
That said, you can’t help but wonder if this is really about royalty rates. As we broke it down previously, while Pandora doesn’t enjoy the same rates radio stations do, they’re not exactly paying through the nose per song, either. In fact, one of our regular commenters Flexhead dug up their latest quarterly report, which tells us a bit more of what’s going on here.
Pandora, last quarter, pulled in $120 million in revenue, with nearly two-thirds of that arriving courtesy of mobile listeners. In fact, last quarter, mobile grew 112% year-over-year, and is likely to keep doing so. In other words, this move of Pandora’s just so happens to nudge a small amount of mobile listeners to give them money, while leaving the majority unaffected and in fact unlikely to even realize the restriction is in place.
Pretty clever, Pandora.
