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February 28, 2013

Pandora limits its free service on mobile devices

Internet radio service provider, Pandora Media, has restricted its free service on mobile devices to 40 hours per month.

By CBR Staff Writer

The limit in the service was prompted by a 75% increase in content-acquisition costs as the company has to pay royalty to the artists and copyright holders every time a user listens to a song.

The service provider also expects to boost its ad revenue by limiting the service.

Pandora co-founder, Tim Westergren, said that Pandora’s per-track royalty rates have increased more than 25% over the last 3 years, including 9% in 2013 alone. Royalty rates 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," Westergren said.

The company said that the listeners can pay for listening on mobile once they reach the 40-hour mobile-listening limit.

In January the company had 65.6 million active listeners, a 38% increase from the previous year.

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