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Pandora Introduces Low-Cost, Ad-Free Service

pandoraPhoto by Amy Loves Yah

As CEO Tim Westergren noted in Pandora Media‘s (NYSE: P) second-quarter earnings release, his company is making “considerable progress on our product development plans.” The fruits of last quarter’s labors were recently unveiled with the debut of Pandora Plus, a $4.99-a-month subscription service that includes several new features.

The ad-free service includes “more skips, replays and offline listening to Pandora’s personal music experience.” That expanded ability to skip or instantly replay more songs is also being rolled out to Pandora’s existing, ad-supported service.

The “predictive offline” feature of Pandora Plus allows users keep listening when their cellular signal is lost; it stores streams from four of your “favorite” stations (as determined by past usage) and automatically switches over to them when it can’t stream in real time. (No need to worry about what this would mean for your data plan — it only downloads those streams when you’re on WiFi.)

Pandora’s new ad-free plan was revealed just two days after it inked direct-licensing arrangements with some of the biggest labels in the music industry, including Sony Music and Universal Music Group, along with “over 30 other independent labels and distributors.”

Product VP Chris Becherer said securing those licensing deals was a significant step toward getting the new service out to the masses. In fact, the company wouldn’t have been able to roll out Pandora Plus without them.

This service could give Pandora a real boost as the market for ad-supported streaming music stalls. Last year, subscription music streaming grew into a $2.3 billion business worldwide, up from $1.6 billion in 2014. During that same time, ad-supported streaming remained stagnant at just $600 million. Considering that its revenues jumped 20% last quarter to $343 million, Pandora wasn’t hurting with its ad-driven model. However, with a growing number of consumers shifting to ad-free options, it makes sense for Pandora to seek opportunities to gain share on both the sides of the streaming music fence.

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Tim Brugger has no position in any stocks mentioned.

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