Login

Pandora raises fees and drops annual subscriptions, citing rising music costs

pandora-app-logo.0.jpg

Pandora's ad-free internet radio service debuted in 2009 for the very affordable price of $36 a year. Those were the good old days. Today the company announced that its monthly fees will increase from $3.99 to $4.99 and the annual option will disappear entirely due to rising licensing costs.

"The costs of delivering this service have grown considerably," the company says in a blog post. "For example, the royalty rates Pandora pays to performers via SoundExchange for subscription listening have increased 53 percent in the last five years and will increase another 9 percent in 2015." SoundExchange is a nonprofit that collects royalties on behalf of artists.

Pandora says royalty costs increased 53 percent since it started

Existing monthly subscribers will be allowed to continue paying $3.99 for now, and annual subscribers will be transitioned to the discounted $3.99 monthly rate.

The price hike is a risky move, given that data suggests customers are willing to spend an average of about $48 a year on digital music. However, Pandora is still cheaper than its competitors. Spotify and Beats Music are both $9.99 a month, while Rdio is $4.99 for web streaming, $9.99 for web and mobile streaming, and $14.99 if purchased through the Apple App Store.

Pandora has been bemoaning royalty costs for years. In 2013, 48 percent of its revenue went to pay for music. The company continues to make almost four times as much money from advertising on its free service as it does from subscribers. Pandora, a public company, made over $600 million in revenue in 2013 but its net income was negative.

The Verge
X
Log In Sign Up

forgot?
Log In Sign Up

Please choose a new Verge username and password

As part of the new Verge launch, prior users will need to choose a permanent username, along with a new password.

Your username will be used to login to Verge going forward.

I already have a Vox Media account!

Verify Vox Media account

Please login to your Vox Media account. This account will be linked to your previously existing Eater account.

Please choose a new Verge username and password

As part of the new Verge launch, prior MT authors will need to choose a new username and password.

Your username will be used to login to Verge going forward.

Forgot password?

We'll email you a reset link.

If you signed up using a 3rd party account like Facebook or Twitter, please login with it instead.

Forgot password?

Try another email?

Almost done,

By becoming a registered user, you are also agreeing to our Terms and confirming that you have read our Privacy Policy.
Spinner.vc97ec6e

Authenticating

Great!

Choose an available username to complete sign up.

In order to provide our users with a better overall experience, we ask for more information from Facebook when using it to login so that we can learn more about our audience and provide you with the best possible experience. We do not store specific user data and the sharing of it is not required to login with Facebook.