Pandora will lift the 40-hour listening cap on its free mobile usage on Sept 1st. According to CFO Mike Herring, the company expects, with the recent improvement in business, to be able to increase revenue through ads and will no longer cap its users in order to try and convince them to become paying subscribers. Herring anticipates lifting the cap will improve user experience while causing no harm to the company’s ability to monetize.
According to AdAge, 70% of the company’s $128.5 million second-quarter ad revenue was due to mobile. Since the cap was implemented, Pandora found a 10% reduction in its users. The number of users is expected to rise with the cap removal.
According to John Trimble, Pandora’s chief revenue officer, audio ads account for the bulk of Pandora’s total ad revenue. The company has already successfully penetrated the $15 billion market in broadcast radio advertising and is among the top 28 in radio markets. Its fastest growing ad revenue is in local ads. Overall, the company has marked itself as a very attractive alternative to local radio. Now, with the cap lifted, the predicted increase in users could put Pandora in good standing to compete and rise the ranks as the top mobile destination for audio ads.