Boston, MA 04/07/2014 (wallstreetpr) – The monthly price of Pandora One has been increased from $1 to $4.99 recently by Pandora Media Inc (NYSE:P). This will apply to all new subscribers with the existing customers experiencing no change for the time being. Additionally the annual subscription plan is being scrapped and all those currently under the scheme to be brought under the same roof of monthly payments of $3.99 at their next renewal. On the assumption that there will be no customer loss, this move will lead to higher ARPU next year which translates to higher income for the business.
iTunes and its impact
While iTunes had been slated to provide a stiff competition to Pandora the reality was far from it. This is because when iTunes was first launched the shares of Pandora had plunged down. Pandora Media Inc (NYSE:P) has reported a total listener hour of 1.71 billion hours; which was a 14% up from that of their March numbers, and their active listeners rose by 8%. This clearly shows how the impact of iTunes was way less than that was estimated. The most conclusive evidence is that Pandora’s share of the U.S. radio Market climbed from 8.1% to 9.1%.
Benefits from price hike
That the price hike will generate direct revenue is a given obvious. Providing the same service if the company increases the price, then an additional amount will trickle down to the coffers of the company close to the amount of $40 million. Increased cash flows will help counteract the royalty costs, which have increased by 53% and are expected to go up by another 9%. It had become imperative for them to increase the subscription rates in the absence of their free ad supported service. It will also be beneficial to attract more paid ad services and to curb more price hikes.
