Pandora CFO Mike Herring announced and elaborated on the decision to lift the 40-hour per month listening limit from Pandora at its earnings call today. Put in place this past February, the 40-hour per month radio limit prevented any free users to listen to more than 40 hours of Pandora radio from a mobile device per month.
Herring said today that the reason was mostly to lower costs, but Pandora found that usage dropped by about 10 percent after the limit went into effect. During recent months, the company has found new ways to generate money and monetize the radio past 40 hours per month, so the limit is no longer needed.
"When we introduced the 40 hour mobile listening limit, we were confident that our scale – over 7% of total radio listening and Pandora’s number one ranking in most major markets – would allow us to take this action without impacting our key monetization initiatives in driving the disruption of the radio advertising market and driving our mobile advertising leadership," said Herring. "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."
The limit will officially be removed as of September 1st.
Pandora's timing is somewhat interesting though, since Apple's free iTunes Radio service is launching alongside iOS 7 next month. Perhaps this was strictly a competitive move. If there's anyone who can severely impact Pandora's business, it's Apple. We'll find out in the coming months for sure if that proves true.
Source: TechCrunch | Image via Engadget