(Photo: Spencer Platt, Getty Images)
By Roger Yu, USA TODAY
Citing rising royalty costs, online radio Pandora says it will limit free mobile listening to 40 hours a week.
company, which relies mostly on ads for revenue but pays music
copyright holders royalty fees, says only a small percentage of account
holders -- 4% -- listen more than 40 hours a week. The average listener
spends about 20 hours listening to Pandora across all devices in any
given month, it says.
The limit doesn't apply to desktop and
laptop listeners. The company also offers a subscription option that
delivers no-ad streaming for $36 a year. Subscribers who reach the limit
can also opt to pay 99 cents for unlimited listening for the remainder
of that month.
"Limiting listening is a very unusual thing to do,
and very contrary to our mission," wrote Tim Westergren, in a company
blog post Wednesday.
With increasing popularity and a growing
user base, Pandora has seen its per-track royalty rates rise more than
25% in the last three years, including 9% in 2013. They are scheduled to
increase an additional 16% over the next two years, he wrote.
December, listener hours totaled 1.39 billion, a 54% jump from a year
earlier. Active listeners rose 41% year-over-year to 67.1 million in
"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," he wrote.