Pandora listeners are now hearing as many as seven advertisements an hour as the music streaming service tries to boost its ad revenue.
The company said this week it had previously set a limit of six ads per hour but was slowly increasing the ads for listeners in certain geographies and demographics—bumping up its average ads per hours above three for the first time ever. Users can pay $4.99 a month or $54.89 a year for an ad-free experience. (Pandora gets 80% of its money from ads, with the rest coming from subscriptions.)
While the ad increase has been good for sales—the company reported a 30% increase in second-quarter ad revenue—it may be taking a toll on music lovers who don’t want to spend 6% of their Pandora experience listening to ads.
Growth in active listeners has plateaued.
As has the number of listener hours, which has stalled at 5.3 billion hours.
To be sure, increasing ads might not be the only thing stunting listener growth. Pandora CEO Brian McAndrews attributed some of it to seasonality—”people are on vacation and away from work and also spending more time in their cars.”
He also said moves to improve the listening experience have led to people skipping fewer songs, which has “paradoxically had a dampening effect in reported hours,” he said.
And of course, Pandora is facing stiff competition from the likes of Spotify and last month’s launch of Apple’s new music service—even though McAndrews told analysts on Thursday (July 23) that Apple Music has had “no impact.”
According to McAndrews:
With any big launch like this and the noise and things happening in the marketplace, there could be some listeners who experiment with the service and there could be some short-term impact, but we don’t—we haven’t seen any—we aren’t seeing any meaningful listener impact at this time, and we don’t expect any long-term meaningful impact either.