If you’re a fan of Pandora’s streaming internet radio service, you can finally breathe easy. The company (along with other internet radio outlets) had the shadow of a royalty increase looming overhead, but it appears that it has hammered out a deal that will keep it afloat. But in the effort to stay alive, Pandora had to make some sacrifices. And so may you. In an e-mail to TechCrunch, Pandora CTO Tom Conrad wrote:
While we feel this is a substantive victory, the revised royalties are quite high – still much higher than any other form of radio. As a consequence, we will have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the free version of Pandora. In any given month, a listener who hits this limit can then opt for unlimited listening for the remainder of that month for just $0.99. In essence, we’re asking our heaviest users to put a dollar (well, almost a dollar) in the tip jar in any month in which they listen over 40 hours. We hope this is relatively painless and affordable-the same price as a single song download. Alternatively, they can upgrade to “Pandora One”, our premium version which offers unlimited monthly listening in addition to its other benefits.
Pandora appears to walking an extremely tight line between generating revenue and pleasing longtime listeners. We think that charging extremely heavy users a buck is more than reasonable–in fact, we’re surprised that it isn’t more. Still, there will undoubtedly be some who are upset about the move. What’s you stance on Pandora’s new heavy usage fee?