The Internet radio station cites royalty costs as the reason behind the move.
In a blog post, Pandora CEO Tim Westergren has announced a 40-hour-per-month limit on free mobile listening through the service. Westergren holds that less than 4% of Pandora’s user base will be affected by the move, with the average listener spending 20 hours across all devices per month.
Westergren blames the decision on royalty rates, which he claims have increased by “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.” As The New York Times reports, more than 75% of Pandora’s usage is on mobile devices, but while the royalties are the same across all platforms, mobile advertising rates are lower than those of other platforms.
With the limit in place, Pandora superusers have a variety of options: listen to unlimited, ad-supported Internet radio on the desktop platform, pay $0.99 for unlimited listening after hitting the 40-hour limit, or upgrade to the ad-free Pandora One service for $36-per-year.
This is the latest step in Pandora’s attempts to deal with royalty rates. Westergren supports the Internet Radio Fairness Act, legislation that detractors claim would cut Pandora’s royalty payments to artists by up to 80%.