Citing higher royalty costs, Pandora on Tuesday said it is raising the price of its ad-free PandoraOne service to $4.99 a month for new subscribers, starting in May.
Existing PandoraOne subscribers will continue to pay $3.99 a month, the company said on its blog. Pandora is also doing away with its annual subscription option, which cost $39 a year for ad-free listening. Existing annual subscribers will be asked to pay $3.99 a month when their annual period is over.
Though the vast majority of Pandora's 76.2 million monthly listeners access the free, ad-supported version, about 3.3 million people have signed up as of Dec. 31 for PandoraOne. The company last year generated $116.7 million from subscriptions to PandoraOne in 2013, up from $49.3 million in 2012. It's unclear how the 25% price increase will affect that stream of the company's revenue.
The company said the rate increase is designed to offset increases in royalty costs, which "will increase another 9% in 2015."