When the popular internet radio service Pandora declared its quarterly earnings on Thursday, August 22nd the CFO of the company Mike Herring also made it known that they have decided to lift the 40 hours monthly limit for mobile device users from September 1st. Here is the exact statement of the executive, which TechCrunch reported:
“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. 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.”
On this occasion the company also issued a press release, which described the reason behind placing the limit by saying that Pandora had to introduce the limit for free mobile listening back in March in order to control the swiftly increasing royalty cost.
According to Wedbush Securities Inc.’s analyst, Michael Pachter, “Pandora’s results since implementing the cap suggest the company is starting to contain content costs, its biggest expense, without alienating listeners.”However, now the cap has finally been removed and mobile users can now once again listen to their favourite music through Pandora.
To cherish this moment Pandora’s founder, Tim Westergren also gave a statement in the press release, in which he said that, “We’re pleased to once again maximize free listening for everyone on Pandora. The more than 70 million listeners that tune in every month will now have more time to hear the music they love, and thousands of working artists will reach more fans.”
Although, Pandora placed the cap to control the cost of royalty, but it failed to generate any revenue from limiting free mobile, as only 4 percent of the users were found going over the limit. At the same time the radio service also experienced that the number of its listeners had declined by 5.1 percent. So this suggests that Pandora has made the right decision by lifting the cap.
Source: 9to5Mac
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