Costs Surge, Pandora Mobile Cap Returns

As it struggles to deal with rising royalty costs, streaming radio service Pandora is bringing back an old idea by capping free mobile usage at 40 hours per month.

The company previously limited free monthly desktop usage to 40 hours, but it lifted the cap in September 2011. According to telecrunch.com, CEO Joe Kennedy suggested that Pandora’s mobile business is in a similar position to its desktop business a few years ago — it needs to make more money. At the same time, Kennedy said his goal is still to offer free music to everyone.

He also noted that there’s a big difference between mobile and desktop usage patterns — there are desktop users who basically listen to Pandora all day while they’re at work, so a larger percentage of them that exceeded the monthly limit. On mobile, however, the cap should only affect 4 percent of users.

That may not be much consolation if you’re in that 4 percent. Kennedy said the company is also trying to make the system as straightforward as possible. You’ll get an alert when you reach 85 percent of the limit, and when you hit the cap, there are a couple of pricing options: You can pay a one-time fee of 99 cents to get unlimited listening for the rest of the month, or you can sign up for a Pandora One subscription, which includes unlimited, advertising-free songs.

Kennedy is placing much of the blame on the rising cost of music — he said that per-track royalty rates have increased 25 percent in the past three years, with an additional 16 percent increase expected over the next two years.

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