A note to our listeners

This week we will begin communicating directly with a small number of our listeners as we introduce a 40-hour-per-month limit on free mobile listening.

Most of you reading this will never hit the limit. In fact, it will affect less than 4% of our total monthly active listeners. For perspective, the average listener spends approximately 20 hours listening to Pandora across all devices in any given month.

That said, limiting listening is a very unusual thing to do, and very contrary to our mission so we wanted to share a quick explanation. Pandora’s per-track royalty rates have increased more than 25% over the last 3 years, including 9% in 2013 alone and are scheduled to increase an additional 16% 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.

For listeners who do hit the limit, we have a variety of options available to keep the music you love flowing. Listen for free for as many hours as desired on desktop and laptop computers; pay $0.99 for unlimited listening for the remainder of that month, or subscribe to Pandora One for unlimited listening and no advertising.

In short, this is an effort to balance the reality of increasing royalty costs with our desire to maximize access to free listening on Pandora. We will be sure to alert any of our listeners that start getting close to the 40 hour limit. As always, your feedback is welcome.

Thanks for listening,
Tim (Founder)

Tim Westergren

Founder http://www.pandora.com/profile/tim

511 thoughts on “A note to our listeners

  1. This sucks I hate pandora now I’m now looking for a new app to listen to music not only have you lost millions of music lover you’ve lost YOUR MINDS

    • Try Grooveshark. Unlimited, works on smart phones including iOS (IN BROWSER!) with no install required, no forced audio ads (it’s all stylish banner ads instead of the hideous monstrosities I see on Pandora), and best of all it’s entirely FREE, FREE, FREE! The only downside is it’s streaming only and the suggestion engine sucks but they have literally everything I’ve never tried to find on there. And it’s not like Pandora’s suggestion engine is worth a crap anymore, for whatever reason it’s cramming all manner of unrelated sponsored songs down our throats – which I generally would not care about if it weren’t for the fact that those artists don’t sound ANYTHING like what I’m looking for. COME ON GUYS, CHRIST! You guys used to be awesome when it came to suggestions, even sponsored suggestions were GREAT – that’s the only reason I went on this site but as it stands it’s not worth my time!

      • I’m with you dude! Pandora is crap! And even worse still, Pandora One, their paid “upgrade”! My favorite part? Oh it’s a good one! How about when you thumbs down a song, the same song, at least, once an hour, but when you really enjoy a song, you can thumbs up it everywhere possible, like the “now playing”, “more lyrics”, on the album it belongs to, and then the twelve different versions that show in the “related songs” section, and you may, but only if your lucky, hear it once a day! Wtf Pandora! I even pay for this crap! Who’s the dumbass then? Apparently it has been me, but not for much longer, I can assure you!

    • Well i tried listening to Pandora while working out today….. after 3 songs and 6 ads that knock my stream out everytime i give up! I have had my Pandora accnt for a many years but i. refuse to listen to 90% ads and 10% music.

    • I don’t think that’s too bad. And it’s not impacting too many ppl so hey. After all sure it’s free for the listeners but nothing is free in this world and pandora is a business.

    • Why you whining about limits on free streaiming? 40 hours is a lot. Streaming data isn’t free and neither are the royalties. Advertizing can only pay so much of that cost. Become a premium member for $36 a year($3 a month) and never run into limits again or go ahead and switch but sooner or later the other free alternatives will be in the same boat if they expect to remain in the black. The piper must be paid.

  2. Pandora has worked out great for me but then I heard about this monthly limit. I think I’ll look into raditaz. now I know there is a limit to hearing music on pandora but I can’t check and see how many hours I have left. It’s all a trap come and hear ‘free’ music with lost of annoying advertising and oh wait it’s not free. I liked pandora but they could be lots better without advertising and no limit but then again they also need to make money somehow.

  3. Nonsensical…why would anyone choose to pay 3.99 a month rather than .99/ month IF they hit the limit? It’s a business so whatever they gotta make $$, just be smart about your pricing models!

  4. I would like to put Pandora’s decision in context. Under the SoundExchange Pureplay agreement, Pandora is obliged to pay a per song royalty of $0.0012 per song in 2013. This is for non-subscription streaming service. Under the same agreement, Pandora must pay $0.0022 per song in 2013 for music streamed to subscription members. Assume that the average song is 3 minutes and 45 seconds, and Pandora must pay a royalty of ~2c per hour to deliver its free service.
    At 40 hours of mobile listening, Pandora is paying ~80c in royalties to provide the service for free. At 400 hours of mobile listening, that number grows linearly to $8.00.

    Pandora, as a business, must also monetize your traffic. The company has disclosed (in its 1st quarter of fiscal year 2014, which ended January 31, 2013) that they are able to sell mobile advertising at a rate of $23 per 1000 ad impressions. This rate is less than half of the $48 that the company is able to get for its “traditional computer” advertising, which has more space for display advertising. So, while Pandora does offer free service to sell ads, the reality is that mobile today, despite being ~75% of the traffic, generates revenue at less than half the rate of the traditional computer.

    From a total business perspective, a whopping 60% of the company’s revenue is paid back for the music royalties. That leaves very little left to pay for other operating expenses. Last year (full year ending January 31, 2013), the company generated $427 million in revenue, up 56%, but the company still lost $37.7 million for a negative 8.8% margin. As the company notes, the current royalty structure also has built in escalators of approximately 8% per year.

    Who am I? I am a professional investor, and my firm does have a long position in Pandora. I am also a Pandora One subscriber. Anyone who wishes to check my facts can start at Page 8 of the company’s Form 10-K for Fiscal Year 2012.

    • First off, extremely insightful. Most people today seem to forget that free is not sustainable and that we should be thanking Pandora for all the years it has been free. Also if you can’t afford $4 for unlimited then consider this, even at minimum wage you get 80 times your financial investment into your well being. This is a simple and very reasonable fee. Sheeze people, even all you Walmart lovers should see this as a great deal!

    • This is fantastic, I wish that people would add more facts and less emotion when it comes to these decisions. Nothing is truly “free” as someone is paying for it somewhere. Thank you for the valuable behind the scenes look at how this affects us.

    • They should be making enough money through their mobile ads..there are a lot of them in one day of listening. This is not a good idea at all. I just feel they are wanting more and more than they actually need.

    • If Pandora has to pay more for music then the listeners have to pay more or get fewer services. This part is perfectly understandable. The frustrating part is that Pandora seems to be accepting the demands to pay for skipped songs without protest. Skipped songs are songs you don’t like! I think Pandora should make a deal to pay nothing for songs that are played for less than 15 seconds. The listener gets to the good stuff much faster and more often. They pay more for the service and buy more songs. Pandora pays less. The music suppliers lose nothing and get incredibly valuable feedback on unpopular music. In fact, right now the suppliers are probably getting very skewed feedback because listeners don’t skip to avoid hitting the limit.

  5. This really does suck Pandora. I already pay for Pandora One and still get this stupid Toyota commercial. I will not renew for sure now. I cannot believe you have done this to me. Isn’t this false advertising. I want my money back. I will call everyone I recommended this too and revoke my praise.

  6. This whole “Will affect less than 4% of our listeners” is a bunch of bullshit that you guys are pulling out of your asses. Seriously You can clearly see by other comments that it’s not just affecting me and a few others that listen to music. I play, listen, write, and perform music. I practically live, breathe, and listen to it 24/7- and the fact that you guys think that it’s not going to affect anyone and people are just going to move on you clearly have your heads up your asses. Goodbye Pandora. It was nice while it lasted.

    • You actually have it backwards. Pandora’s business model is quite liberal in it’s design. The premium customers are subsidizing much of your free listening in the similar way people who have jobs pay taxes to assist others who aren’t working/paying into the system. Reality is setting in now forcing them to take a more conservative approach due to rising operational costs. They can’t stay in business using the old model anymore.

  7. Not mad at them
    Do what you most
    just know
    I’ll delete in a heartbeat if the 40 hours a month thing is “annoying ”
    Spotify is my back lolz

  8. Pandora has now decided to take a stance in politics that crosses the line..LISTEN UP PANDORA don’t do this at any one time you will alienate 5-% of your listeners or more in some cases. Because of this I know at least 3 who have decided NOT to upgrade. calling for political activism in half presented ads is what the Lamestream press does not a credible music station .
    stick to notes and music .

  9. I was quietly praying, listening to Chant, and a dishonest, divisive Ad for Obama’s race mongering policy on voting rights came on. Stop it right away, please.

    • I too have listened while in meditation sometimes and have stopped now with the seemingly endless ads. Even for free listeners it would seem a company would want to create a desirable listening experience. This is as bad as commercial radio these days. And I agree about the obama ad. That was the straw that broke it. DONE.

      • While I too would not want to listen to political propaganda in ads such as this example, they have to pay the bills somehow. An ad is an ad without regard to what it is about. Now if they were refusing ads from the different political sides, which I hope they aren’t doing, this would be inappropriate. The Democrats believe their future is in the younger generation so they are simply targeting the younger demographics that Pandora has.

  10. Gosh folks, are you all under the false idea that everything is free? Pandora pays for the music you are streaming and they can’t pay bills by not charging. You can always listen to NPR and let the government pay for your listening pleasure. But who really pays for NPR, we the tax payer. Listen to your local station and you get more commercials than I know I want to listen to. CD players are cheap and you can get CD’s second hand for just a few bucks. That might be a good option for those of you who are so cheap or thrifty…

  11. Wow….all I can say is Thank you for free music all these years. Of course I will support you…all it will require is one less download from iTunes to pay for my month of free music here…no contest, great deal, great service.

    • Lol finally! Someone who isn’t cheap haha. All I see is complaints. The way I see it is if you pay the $1 at the end of your 40hrs all you would be paying is 12 bucks. C’mon get real guys you really can’t pull out $12 dollars out of your ass for a whole years worth of music??? Cheap ass people. Thanks Pandora! I will continue to listen to your awesome stations :)

  12. As a older listener (64) I enjoy pop music (Train, Bruno Mars, Lifehouse, etc.) I think 3.99 a month is so much less expensive than what I’ve been spending on individual tracks. I really like Pandora and after 2 days, signed up for Pandora One. Anyone that complains about the limit of 40 hours a week of free listening to their favorite songs has way too much time on their hands.

  13. This comment is unrelated to this post, but I have a suggestion. I think that when someone comments on a song or artist on Pandora, there should be an option to reply to that comment. Kind of like on YouTube, how there is a reply to the comment function. I think it would be handy, personally.

  14. Great job! $0.99/month is entirely affordable. I will definitely pay. Thank you for being flexible. I hope Pandora fans aren’t turned off by the realities of legal, virus-free, streaming music. Also, for those of you complaining about the ads, try FM radio for 1/2 an hour. You’ll soon realize that Pandora is by far the better choice. Great work guys and gals! Keep it up.

  15. Too many fees and too many commercials. I’ve heard they even have commercials on Pandora One now. I can’t imagine paying for a subscription and then being subjected to commercials! Pandora is not what it used to be. I’ll be switching to Apple Radio or an alternative!

    • I have been using Pandora One for over a year now and I have yet to hear a commercial. When I did use it free, I only recall hearing one commercial at a time maybe 3-4 times an hour and many were short. Comparing that to the 3-5mins of commercials at a time on radio, it is much more tolerable.

  16. Pandora, why cant I get free Pandora on my computer, but only on a smart phone. You people had something really good going and if I cant get the same on a PC, then like a lot of others, I say to heck with you. You are just like every greedy company out there. I thought you were different. I guess money corrupts, doesn’t it

  17. Spotify, Iheart, all those other music apps are basically the same. there are not as popular or as old as Pandora that’s why that haven’t been pushed to ask their followers to pay for music. however when you look at it these other music apps do offer unlimited and add free listening but for a price. spotify and rhapsody ask for 10.00 a month for that service. rhapsody asks for even more if you are using more then 2 devices to listen to music and you can not use the same account at the same time on separate devices which is a pain in the ass. another thing is that other music apps don’t have the same music results as Pandora. Pandora is well worth paying for. Especially if they are only asking for 3.99 a month, 0.99 for unlimited music if you surpass your 40 hour limit in two days as most of you say you will, or 36.00 for the entire year. I have been a long time Pandora listener and will continue to be. thanks a lot Pandora keep it up.

  18. I have been a fan of pandora for about 3 years and they have steadily got worse and resemble regular radio- only you have to use your data on your phone. Being a member of a fitness club I loved using pandora to workout to- the 40 hour limit is ridiculous as music lovers can listen to this much in 2 weeks- I have converted to I heart radio- ad free radio, and am loving it

  19. My god people…….stop bitching.
    Everybody want’s something for free.
    Dig into your wallets and pay the 4.00 a month and enjoy the benifits. A couple days after I started listening to Pandora I ponied up and subscribed.
    Small price to pay for all this great music!!

  20. I had my time run out today. I can usually make it through the end of a month. However, I did listen to much more than my share of Pandora this month so what did I do today? I payed the $0.99 to finish out my month! Problem solved. 99 cents will cover the rest of the month. Really that’s not much to ask for, especially when you consider that there are some radio apps that charge $3 and $4 per month just to use their mobile services. Some of you spend that in one day at Starbucks.

  21. What on Earth makes all of these people think they are entitled to everything? If you aren’t paying for a service, they have the right to do whatever they want, and you have to deal with it since you’re getting it for free. If you want to be able to complain without looking like a cheap loser, pay for a subscription first.

  22. Hate to say it but if someone spends 40 hours in the first week of listening those would be your biggest fan and u can take it from any celebrity you take care of fans or lose them.

  23. I think this is an okay idea- I do listen to a lot of Pandora, I probably listen to 30 hours a month on my computer and 20 on my mobile phone- the people that listen to 40 hours on your phone; I would just purchase the 0.99 cent extension because this is already saving you a lot of money and showing you some very cool tracks. Overall, cool it. You won’t die.

  24. For those who are complaining about Pandora limiting the amount of hours that they will be giving them free music, don’t they still use data when they use other apps like iheart and so on? Data is data and it seems to be rather limited on most carriers plans.

  25. I’ve already reached the limit for July, now I have to be careful how I listen. At least give us the tool to see how many hours we have. Definitely looking into new apps…

  26. My suggestion is to charge the advertisers a higher fee to advertise on pandora and lower the monthly subscription fee for listeners. You will have more people registering to cover for the lower monthly rate.
    I do not listen to pandora enough to commit to a monthly subscription, but if the fee was a bit lower I wouldn’t mind letting it roll month to month even if I hardly listen.

  27. I have been Pandora user since inception. now I hate it when I found out this stupid 40 hrs limit. I got this message in less than two weeks. It’s messed up!!! NO MORE PANDORA FOR ME.

  28. You won’t have to worry about me using up to much free time, I’m dropping Pandora as of now. The reason is those lying Obama commercials about him trying to help the middle class. He doesn’t give a hoot about the middle class, it’s about controlling the multitudes. He’s a socialist and doing nothing more than what he promised, fundamentally changing America to a socialist nation with no constitution and totally dependent on the government. Goodbye Pandora, I’ve enjoyed you but cannot tolerate your supporting this kind of thinking.

    • That’s odd, i haven’t heard an Obama commercial in ages. Must be only broadcasting in the states that didn’t vote for him.

      I vote for a Politics free Pandora.

  29. I understand the increasing costs of royalties and whatnot, but I find this incredibly unfair. I don’t have a computer and I can barely scrape together enough money to pay my phone bill each month, let alone the extra money (though you may see it as minimal, for me it is undoable) you demand for something that was free when I signed up for this site.
    Not to mention the fact that you can’t check and see how many hours you have left. And do ads count as “listening time”? What about when my phone freaks out and only plays 20 seconds of a song before skipping to the next one and doing the same thing? I know it counts as skips, but does that count as listening to the whole song?

    Suggestions:
    Charge Pandora One listeners an extra dollar? Charge the people who can afford it, don’t extort it from people, who can’t.
    Charge more to advertize on Pandora?

  30. Please for my meager sake… more ad variety! I don’t mind the occasional brief ad but if I hear that annoying Allstate ad again for the billionth time in a row I WILL get road rage.

  31. PLEASE RECOMMEND A NEW FREE RADIO STATION TO USE ON MY IPHONE. I UNINSTALLED PANDORA & DON’T PLAN TO USE IT. I LISTEN TO MUSIC MORE THAN 40HRS A MONTH.

    PANDORA YOU WILL TAKE A LOSS FOR BEING GREEDY!

  32. I see the point now. At first I thought it was 40 hours total But per month is not bad at all also it’s only .99 to continue that month if you do go over we pay more than that for one ringtone! So cheers to you Pandora your doing a fine job.

  33. Good News Technology Sites are informing that Pandora 40 hour limit is to be removed so USA, Australia and New Zealand the limit from September 1st. http://www.neowin.net/news/pandora-to-lift-40-hour-mobile-listening-limit-ahead-of-itunes-radio-launch

    Hopefully for those such as Europe hopefully rivals follow suit banishing service limits to the duration of play time with the prospect of iTunes Radio launch soon seems to rattled some feathers.

    If iTunes Radio includes an “free” tier with advertising Google Play Music All Access will want to level play field at least in the US and later probably Europe with the need to create an “free” version of “Play Music AA”.

    Even more annoying to Europeans is Free mobile listening from Spotify do not exist but Free Spotify Radio exists in the US! Only Free listening is through Desktop!

    Pandora and Spotify – Excluding Europe you missing an big market!

  34. Pandora only licensed and accessible in the US, Australia and NZ. Elsewhere like Europe Spotify really is the only alternative even if its service is worst, 40 hours is double allowance than what Spotify allows for free members so in a way the discontentment by Americans, Australians and New Zealanders getting a raw deal is not really merited.

    Spotify you do not get Free Mobile Streaming either!

    But good news for you is September 1st – no limit and thank iTunes Radio!

    http://www.neowin.net/news/pandora-to-lift-40-hour-mobile-listening-limit-ahead-of-itunes-radio-launch

  35. I was on board Pandora from the beginning. And I turned a number of my friends on to the concept and shared my stations. Now, the ads, the time limit and the anti-Republican crap is the final straw. Sorry, I’ll find my music and historic notes elsewhere.

    • Pandora can do whatever they want about pricing, ads or anything else. If it is too onerous they will lose customers and then they will make the service cheaper or more appealing in some other way. No reason to get upset. This is free enterprise.

      • Well I think there is reason for being “upset.” A good idea has been turned into an irritating concept. I’m all for free enterprise and I’m just letting the people who came up with these changes know why I’m not logging in any more.

  36. Pandora sucks. I hope you go out of business and end up begging on the street. Seriously go get hit by a bus. You have more commercials than the radio! I can’t skip at all anymore, and now even if I thumbs down a crap song I still have to sit through it.

  37. it was nice while it lasted now its all about the money isnt it always like extortion ,you pay after weve hooked you you pay or we play sowhere is the line, this could just keep going till pandora costs more then xm which now has less comercials ten pandora! yep you opened pandoras box al right i now make it a point to boycot any one who ha ads on pandora see my station when it was my station refuses to run ads im sick of he stupid time line tan lins summer dum stick add so i refuse to buy their stupid ice cream i refuse to go watch this stupid movie now being aded the family kiss off with your ads

    • Please explain how it is extortion to ask the free users to pay if they use an above average amount of hours of not free for Pandora to supply content? It would be extortion maybe if Pandora was turning a huge profit. The reality is as it stands is they are losing money. Talk about biting the hand that feeds you for free! I suppose you think other companies like Netflix should offer a free video streaming service with unlimited hours?

  38. Maybe I missed it somewhere, but James Childress seems to have more than a slight interest in protecting the latest Pandora policies.
    James, are you a consultant who devised this strategy? Are you in some equity position with Pandora. You have inside information on economic details so you must enjoy some sort of insider position?

    • Nope. I am a user/fan of the service who appreciates the quality of service I get for such a low price. I just do my research before making comments. I am one of the heavier users so I am sure they actually lose some money on me despite paying only $3.99 monthly. Music helps me keep my sanity at work during the slower fall/winter months and I use around 4-6 hours of it per day on my work days. I only listen occasional at home. During the busy times I use much less at work or not everyday so I think it balances out.

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