Citing rising royalty costs, online radio Pandora says Wednesday it will limit free mobile listening to 40 hours a week. The company, which relies mostly on ads for revenue but pays music copyright holders royalty fees, says only a small percentage of account holders -- 4% -- listen more than 40 hours a week. The average listener spends about 20 hours listening to Pandora across all devices in any given month, it says. The limit doesn't apply to desktop and laptop listeners. The company also offers a subscription option that delivers no-ad streaming for $36 a year. Subscribers who reach the limit can also opt to pay 99 cents for unlimited listening for the remainder of that month. "Limiting listening is a very unusual thing to do, and very contrary to our mission," wrote Tim Westergren, in a company blog post Wednesday.
With increasing popularity and a growing user base, Pandora has seen its per-track royalty rates rise more than 25% in the last three years, including 9% in 2013. They are scheduled to increase an additional 16% over the next two years, he wrote. In December, listener hours totaled 1.39 billion, a 54% jump from a year earlier. Active listeners rose 41% year-over-year to 67.1 million in December. "After a close look at our overall listening, a 40-hour-per-month mobile listening limit allows us to manage these escalating costs with minimal listener disruption," he wrote