Pandora has increased the price of Pandora One. The $36 annual subscription will be dropped completely. New subscribers will be paying $4.99 per month, but existing customers with a $3.99 per month plan will be locked into that price as long as they keep the service going. Existing customers on the $36 annual plan will be forced to do the $3.99 per month plan. This raises the cost of their subscription by $12 per year.
Why did Pandora increase the price? There has been an increase in royalty payments to artists.
?We?ve been fortunate to be able to offer Pandora One at an affordable price since its debut in 2009 at $36 per year and later with the introduction of a monthly subscription for only $3.99 per month. Over this same period, the costs of delivering this service have grown considerably. For example, the royalty rates Pandora pays to performers via SoundExchange for subscription listening have increased 53% in the last five years and will increase another 9% in 2015,? said Pandora in a blog post.
The updated price from $3.99 to $4.99 per month for new subscribers is a 25% increase instead of the 53% increase that the company is paying in royalties. The annual subscribers that are being placed into the monthly subscriptions are seeing a 33% increase annually.
Pandora’s prices are still around half of what Spotify, Google Music, and Beats Music charges. But Pandora does not offer the ability to listen to songs, albums, or playlists that are selected by the user. Pandora One allows listeners to play music without ads and with unlimited skips. The free version of Pandora lets users play music, but with ads. Pandora limits the number of times that a user can skip a song.
The updated price will start in May. The existing annual subscribers will be transitioned to the updated monthly model upon the renewal.
“Our listeners are our top priority and, while this affects only a small percentage of our listeners (3.3 million subscribers of more than 250 million registered users total), we hope that you understand why we have taken these steps. Our goal is to continue to be your go-to internet radio destination and enable you to hear the music you love wherever and whenever you want,” added Pandora in the blog post.