Pandora quietly raises prices amid continuing decline in paying subscribers

Pandora has quietly become the latest music streaming service to raise its prices, following in the footsteps of Spotify, Apple Music, Deezer and others.

The music service’s US Premium individual subscription has increased from $9.99 a month to $10.99 a month, matching that of Spotify, as of Friday (May 24), according to news reports and comments on the service’s community chat board. The Premium individual annual subscription rose from $109.89 to $120.89.

The Premium Family plan has risen from $14.99 a month to $17.99, while the annual Family subscription rose from $164.89 to $197.89. That amounts to a 20% increase for the Family plans, compared to a 10% increase on the individual plans.

“Despite the continual rise in music licensing costs, we have been able to maintain consistent subscription prices; however, the current increase in our fees indicates how significant those licensing costs are,” the company commented on a community message board.

“We’re continuously working to control these expenses while still providing a high-quality listening experience.”

Pandora, owned by satellite radio network SiriusXM, works somewhat differently from other streaming services, in that it offers a “radio-style” experience in which listeners can choose from channels that offer a continuing stream of music. On the ad-supported tier, the ability to skip songs or search for and play specific tracks requires listening to an ad.

Those who subscribe to the Plus service – a sort of hybrid between the free and Premium tiers – gain access to ad-free unlimited skips, while Premium subscribers can search for and play tracks without listening to ads.

The Plus service appears to have remained at $4.99 a month; however, those subscribing via the Apple and Google Play stores saw prices rise to $5.99 a month last year.

Some commenters on Pandora’s community message board noted that, at $17.99 a month, the Premium Family plan is more expensive than it is on other services, such as Spotify, which charges $16.99 a month. Some commenters said they would be cancelling their subscriptions; yet others said they would be trying out other services.

However, Pandora had been experiencing a decrease in paid subscribers even before the price hikes. In its Q1 earnings report, for the quarter ended March 31, 2024, SiriusXM reported that Pandora had lost 64,000 paid subscribers, bringing the total to around 5.9 million.

That’s on top of a loss of some 200,000 subscribers in 2023, or 3% of the total, according to the company’s annual report released in February.

Total monthly active users (MAUs) on the service also fell over the course of 2023, from 47.6 million to 46.0 million, a decline of around 3.3%.

For Pandora, the declining user base seems to be a chronic problem, arising in the years after it was acquired by SiriusXM in 2019.

However, earnings from Pandora continued to rise, both in 2023 and Q1 2024, on the strength of rising ad sales on podcasts and longer listening times among ad-supported users.

Ad revenue in SiriusXM’s “Pandora and off-platform” segment rose 1% YoY, to $1.6 billion in 2023.

“The increase is attributable to steady growth in the company’s programmatic and podcasting advertising sales despite a challenged advertising market throughout the year,” the company said in its year-end report.

In Q1 2024, the “Pandora and Off-platform” division saw revenues of $495 million, up 7% YoY, while ad revenue rose 8% YoY to $362 million, “driven by podcasting and programmatic revenue.”

The decline in paying subscribers at Pandora stands in stark contrast to other streaming services such as Spotify, which saw its Premium subscriber base grow 14% YoY in Q1 2024, to 239 million. This despite the service’s first-ever price hike last year, which saw the Premium individual plan in the US rise from $9.99 to $10.99 a month.

Deezer, which has been leading music streaming services in price hikes, and has implemented two hikes over the past two years, reported a 12.8% YoY increase in paying subscribers in Q1 2024, bringing the total to 10.5 million.Music Business Worldwide

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