Pandora Lifting Listening Cap Ahead of iTunes Radio Launch
August 23, 2013 11:11 AM
comment(s) - last by
The cap will be lifted September 1
said that it will lift its monthly cap on free mobile listening (again), which is coincidentally being announced ahead of
Apple's iTunes Radio
An earnings call with Pandora yesterday revealed that the 40-hour monthly cap would be lifted on September 1 for two reasons: other tools such as skip limits are being used to cut usage and costs instead, and more money coming in through advertising is helping Pandora afford those extra hours beyond 40.
Pandora CFO Mike Herring said that usage fell 10 percent when the cap was implemented, but that he doesn't expect the number of subscribers or hours of listening time to dramatically increase with the lift.
This isn't the first time Pandora has used a monthly cap on its service, then lifted it. It did this back in 2011 as well.
Pandora didn't cite Apple's iTunes Radio as a reason for the cap lift, but since the new radio service is about to launch with no caps at all, it's likely in the back of Pandora's mind from a competition standpoint.
ITunes Radio is an Internet radio service by Apple that was announced at the Worldwide Developer's Conference (WWDC) in June of this year. It's expected to be released alongside iOS 7 this fall, and will be available for iOS devices, Apple TV and the iTunes app on both Mac and Windows computers.
Back in June,
The Wall Street Journal
reported that Apple is willing to
pay record labels more in royalties
for the iTunes Radio service that Pandora does. The report said Apple will pay a label 0.13 cents each time a song is played along with 15 percent of net advertising revenue for the first year. In the second year, that 0.13 will bump up to 0.14 cents per song played and 19 percent of ad revenue. Pandora, on the other hand, currently pays labels 0.12 cents per song played.
This could give Apple the upper hand at some point, considering record labels will likely go where the money is. But the fact that Pandora is available on more mobile devices than just those with iOS is still a big win.
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RE: .13 cents?
8/23/2013 1:04:49 PM
Pretty sure it's .13 cents. 13 cents would be quite unsustainable for a free service or even a paid one.
RE: .13 cents?
8/23/2013 4:32:01 PM
Gotta love it when virtual/imaginary money is used.
"Hey! You owe .9 cents man!"
"Ok here's a penny. Keep the change."
P.S. Yes I know with large numbers the parts-of-a-cent adds up, like gas stations and their .9 cents to the end). I just like thinking about how this would work in the real world
RE: .13 cents?
8/23/2013 6:13:08 PM
Wow... I did the math and... even at .1 cents and paying for a subscription, I'm costing Pandora about $40/year since I keep it running almost constantly day and night.
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