Pandora Media Inc (NYSE:P), the world’s most listened to streaming music site, has lifted its limit of 40 hours of free listening after looking at the downsides of the 6-month old policy. Or one can assume that that is the reasoning behind the company’s move. There is, of course, also the looming specter of Apple Inc. (NASDAQ:AAPL)’s imminent move into streaming music with iTunes Radio set to begin with the release of its new OS that will come preloaded on its new phones that will be announced on Sept. 10.
Listenership is up at Pandora
While many argue that Pandora Media Inc (NYSE:P) has little to fear from iTunes Radio, it’s difficult for that case to be made until the service is unveiled. While listenership is up at Pandora, the service hardly resembles the service that still has its hardcore followers. The amount of ads that listeners are forced to take in is substantially more than when the service began. That means that for the devout, its a necessary evil but for new listeners it’s easier to tune out something new.
All that said, mobile use is up 90% from two years ago, and now accounts for 70% of Pandora Media Inc (NYSE:P)’s revenue. It’s for this reason that Pandora has put and end to the policy of limiting listeners to 40 hours per month beginning September 1st. The limit was imposed six months before do to rising licensing costs. Once a listener reached the 40 hour mark, they were given the option of paying $0.99 for the remainder of the month or the existing premium service that streams music without advertisements.
Pandora believes that the limit is no longer necessary
Pandora Media Inc (NYSE:P) believes that the limit is no longer necessary due to the fact that they have found other ways to make more money per listener and listening hour though the company’s financial chief, Michael S. Herring, declined to say what those ways were in a recent interview with the Wall Street Journal.
Herring did say that the average free users listening hours decreased around 10% with the limit but didn’t expect that to change dramatically saying, “We don’t expect that to step back up again.”
Pandora maintains that the move has nothing to do with Apple
While Pandora Media Inc (NYSE:P) maintains that the move has nothing to do with Apple, it most certainly does. Apple Inc. (NASDAQ:AAPL) will begin offering an ad free service for $25 per year next month compared to Pandora One which costs users $36 per year. Apple will also be bundling its iTunes Match service for free which allows users to store all their purchased music “in the cloud.”