A very smart move: Pandora says it will remove the 40-hour-per-month limit on free mobile listening effective 9/1. Pandora says it was able to make this change thanks to the rapid progress of its mobile advertising. According to eMarketer, Pandora is now the third largest generator of mobile ad revenue, behind only Google and Facebook.
“We’re pleased to once again maximize free listening for everyone on Pandora,” said Tim Westergren, Pandora’s founder. “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.”
The limit on free mobile listening was introduced in March 2013 to manage rapidly increasing royalty costs. While in place, this affected fewer than four percent of total monthly active listeners. The company continues to utilize multiple additional levers to carefully and effectively manage its content cost.
RBR-TVBR observation: As we said back in February, limiting free mobile listening was a bad idea in the face of all of the competition out there for mobile listeners—especially in cars: “Mobile listening is the future for Pandora and its ad revenue. Once a listener is cut off and realizes they have weeks or days before they can listen again, they will go elsewhere and may never come back. Obviously, that’s why they lifted the 40 hour limit two years ago. It’s Pavlovian—once “bitten,” the listener will listen less or not at all because they fear they’ll be cut off. How does that help Pandora’s advertisers? This is a penny-wise and pound-foolish move on Pandora’s part. If it’s only 4%, then it shouldn’t hurt the bottom line that much anyway, right?”