Today Pandora announced that it will be removing its 40-hour-per-month listening cap come September 1st. Now free users will be able to listen for as long as they like and ads will play every 30 minutes.
The decision to remove the cap is an obvious reaction to the impending launch of Apple’s iTunes Radio, a radio streaming service that will be shipped to the public in iOS 7 after September 10th. Since more than two thirds of Pandora’s revenue comes from its mobile apps, iTunes Radio is very much a threat.
Apple reportedly has big brands lined up to advertise on iTunes Radio, and Pandora could start losing advertisers if users start flocking to Apple’s new service. The advantage iTunes Radio has over Pandora is that it’s baked right into the iOS 7 Music app. It will also be present in iTunes on the Mac and Windows. iTunes Match subscribers won’t hear ads, but everyone else will.
Pandora isn’t sweating over iTunes Radio yet, but next quarter will be the true test of how the market reacts. “We do not expect Apple’s iTunes Radio, expected to launch this fall, to have a meaningful impact on Pandora’s listener hours or monetization near-term,” said Pandora today, right before it reported healthy growth for its most recent quarter.