Pandora Media Inc (P) To No Longer Cap 40-Hour Free Mobile Listening

Posted Aug 23, 2013

Pandora Media Inc (NYSE:P) CFO Mike Herring said in the company’s earnings call that they will start allowing unlimited listening through mobile devices again.  The company introduced a 40-hour per month limit in place for free listening on mobile devices back in February.  Pandora put the cap in place due to an increase of royalty rates.

To remove the cap, Pandora Media Inc (NYSE:P) has a premium service called Pandora One, which costs $36 per year.

Pandora Media Inc (NYSE:P) saw an increase in advertising income and they have tightened their costs so that the cap can be lifted.

“Our investment in advertising infrastructure and implementing smart levers such as reducing song skipping and limiting mobile listening have helped us drive monetization and manage content costs, as reflected by the increase in RPM and a decrease in content costs as a percentage of revenue,” said Pandora in the earnings call.  “As our results have shown, the continued strong growth in our advertising revenue allowed us to cover the increased royalty costs with dollars left over to invest back into the business. With these tools in hand, and insight into how they work, we are resetting our levers in September. Notably, Pandora plans to eliminate the blanket 40-hour-per-month limit on free mobile listening effective September 1st.”

Pandora Media Inc (NYSE:P) is already fiercely competing against Spotify.  The company will also be facing off against Apple iTunes Radio in September.

Pandora Media Inc (NYSE:P) has hit revenue of $162 million, which is up 58% year-over-year.  The 40 hour listening cap will be eliminated on SEptember 1st.