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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Sounds like Higher Advertising costs....
8/24/2013 5:19:16 AM
Apple is known to want their 30%....so I'm guessing that the cost to advertise through this service will be higher than elsewhere. Apple does have a closed ecosystem with lots of followers....so it makes sense to leverage that asset with a higher cost of entry.
Also, you will have to have Itunes installed to use the service and that's one step closer to getting you to buy other services/products within Itunes..."Welcome to our store....stay awhile and browse"
Smart business plan IMO.
I'll never own/use an Apple product, but I recognize a good business opportunity.
Best wishes on keeping what you earned.
"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer
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