Anthony Ha, a writer at TechCrunch who covers media and advertising, just yesterday explained Pandora’s plan to cap users mobile monthly limit in his article Pandora Resurrects Its 40-Hour (Monthly) Limit On Free Music, But This Time It’s Capping Mobile Usage. Prior to September 2011 Pandora had a 40 hour listening cap for its users. Due to increasing per-track royalty costs Pandora plans to reinstate this cap on mobile devices. They claim this will only effect 4% of its mobile users. After the cap is reached on a mobile device users will be able to pay 99 cents for unlimited music on the device for the rest of the month or make a one time purchase of Pandora One.
Is this a smart move for Pandora? Spotify does not offer a free mobile service but its desktop service seems to be many users preference over Pandora. 4% of users does not seem like a large number but in an industry with multiple other options 4% is a large number of customer to upset.
Although Pandora is a tough position of needing to make more money I do not think reverting back to old ways is the best option. In order to charge people for their mobile service I believe that Pandora needs to offer something more than its free service already offers. Just saying you have listened to your cap of music is not a great way to build lasting customer relationships.