A Pandora Price Hike Is Coming

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The online music streaming service is increasing its monthly subscription fee for new customers and dumping its annual subscription option.

You’ll soon have to shell out a little more cash if you want to stream ad-free music online with Pandora.

The music streaming service is boosting prices for the first time since its debut in 2009. Monthly subscription fees will increase from $3.99 to $4.99, or about $60 per year, for new customers. Pandora is also ditching its annual subscription option.

The company said an increase in costs has forced its hand.

In a blog post, Pandora said:

[Since 2009] the costs of delivering this service have grown considerably. 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.

A federal judge recently denied Pandora’s request to pay the same royalty rate as traditional radio stations, which is 1.7 percent, but also ruled that it didn’t have to pay the 3 percent requested by the the American Society of Composers, Authors and Publishers, Engadget says.

Pandora will continue to pay the 1.85 percent royalty rate it’s been paying, The Christian Science Monitor said.

Pandora said existing monthly subscribers will not have to pay the increased fee. Annual subscribers will transition to the $3.99 fee, which will cost $12 more than their annual fee of $36, when it’s time to renew.

But newcomers starting in May will have to pay $4.99. So if you want the paid service at the lower monthly rate, you’d better sign up before then.

In its blog post, Pandora said subscription listeners totaled just 3.3 million of its 250 million registered users. CNN Money said subscription fees made up just 12 percent of Pandora’s total revenue in 2013.

In other Pandora news, Tim Conrad – the company’s chief technology officer and executive vice president of product, is resigning after nearly 10 years at Pandora.

I frequently listen to Pandora for free. Sure, I’m limited on how many stations I can create and how many songs I can skip, and I have to listen to some ads, but I’m OK with that. It’s free, after all.

What’s your favorite music streaming service? Share your comments below or on our Facebook page.

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