Pandora prices inch upward for ad-free version

Streaming radio service Pandora is raising the price of its paid, ad-free version for all new subscribers as well as for some existing subscribers.

For new customers, Pandora One will cost $5 per month starting in May, compared to $4 per month previously. That gives would-be users of the streaming service a little more than a month to lock in the lower rate.

Existing subscribers can still pay the old $4 monthly price, but the option for a $36 annual subscription is going away. All annual subscribers will automatically switch over to monthly billing at their renewal dates.

In addition to removing advertisements, Pandora One lets users skip more tracks per day and listen for longer periods without station pauses. The free, ad-supported version of Pandora will remain available.

The reason for the price hikes? Blame rising royalty rates, Pandora said in a blog post. The streaming service contends that its rates have grown by 53 percent over the last five years, and will increase by another 9 percent next year. Pandora had been fighting in court for lower rates, while the American Society for Composers, Authors and Publishers had been pushing for a rate increase. But earlier this week, a federal judge essentially decided to keep rates the same through 2015.

To deal with higher royalties, Pandora has also tried limiting its free version. Initially, desktop users were capped at 40 hours per month, but Pandora removed that limit in 2011. Last year, Pandora capped mobile listening at 40 hours per month, but changed its mind several months later. It seems that Pandora is now reluctant to tamper with its free service, which means Pandora's paying customers are left to take the brunt of the damage.

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