In an attempt to avoid bleeding cash, Pandora is pressing pause on users who stream more than 40 hours of music per month to their smartphones and tablets.
Those users will either need to pay $0.99 to keep listening for the rest of the month, or switch to a Pandora One subscription, which provides unlimited, ad-free listening for $3.99 per month or $36 per year.
Pandora used to have a 40-hour cap on its desktop website, but removed the limit as part of a big redesign in 2011.
Tim Westergren, Pandora’s founder, said in a blog post that the company needs to put a cap on mobile listening because of increasing royalty rates. Over the last three years, royalty rates have jumped by 25 percent, and are scheduled to rise by another 16 percent over the next two years.
“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,” Westergren wrote, adding that only 4 percent of users should be affected. Pandora is communicating directly with those users this week, and will alert other users as they get close to the 40-hour limit.
It’s worth noting that Pandora did turn a small profit last quarter, according to TechCrunch, but the company expects heavy losses ahead, possibly as high as $20 million in the first quarter of 2013.
Pandora has been lobbying Congress for lower royalty rates, which are currently much higher for Internet radio than they are for broadcast and satellite radio. A bill, dubbed the Internet Radio Fairness Act, aims to level the playing field by subjecting Internet radio to the same royalty-setting standards as other types of radio. (WNYC’s Soundcheck blog has a good summary of the arguments for and against the legislation.)
At the moment, though, the bill seems to be in hibernation, as Billboard points out. That may explain why Westergren didn’t mention it in his blog post.
If you do run up against Pandora’s listening limits, but can’t spare a buck to keep the party going, you’ve got a few alternatives. Slacker Radio and iHeartRadio both allow you to create stations based on artists, and neither have caps. You can also try Songza, which offers curated stations based on mood.