Pandora raises One price to $4.99 per month for new subscribers and scraps annual option, blames royalty rates

Pandora today announced changes to its Pandora One subscription plan, which charges users to listen without advertising. The company is keeping the same pricing for existing monthly subscribers, but new subscribers and annual subscribers have to pay more.

Here is how the changes are broken down:

• Existing Pandora One monthly subscribers that remain active will not experience a price increase “at this time” and will continue to pay $3.99 per month.
• For new subscribers, the subscription price will change to $4.99 per month starting in May.
• Existing annual subscribers that remain active will migrate to a discounted loyalty price of $3.99 per month at their next renewal period.
• Pandora is ending the annual subscription option. The company plans to notify annual subscribers that are approaching their renewal date this week with the new pricing change.

Since monthly pricing for new subscribers only takes effect in May, you can take advantage of discounted loyalty pricing if you subscribe in the next month or so. That being said, this doesn’t mean that the old pricing structure will be around forever: Pandora is merely keeping it around for now.

The One subscription debuted in 2009 and hasn’t changed in price until now. It was offered for $36 per year as well as $3.99 per month (which comes out to $48 per year). The new pricing means users will end up paying about $50 per year.

Pandora says that over the last five years, the costs of delivering its service have grown “considerably.” Royalty rates the company pays to performers via SoundExchange, for example, have increased by 53 percent. Between 2014 and 2015, they will jump another 9 percent.

Pandora notes that only a small percentage of its listeners (3.3 million subscribers of more than 250 million registered users total) are affected by these changes. Still, it’s telling if the most popular music streaming service in the US has to increase its prices to keep up with its expenses.

See also – Pandora founder fights back against RIAA, dispels artist royalty myths and Pandora sidesteps CDs with new music-submission process, designed with indie artists in mind

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