Pandora has announced that it will increase the fee for its ad-free music streaming service by $1 a month, beginning in May. The company says the increase was needed to cover the rising cost of licensing music for the service.
Reuters reports that the company claims that royalties paid to artists had risen 53% over the past five years and will rise another 9% in 2015.
The $1 increase, to $4.99 per month, will take effect in May for new subscribers. Existing monthly subscribers will not be forced to pay the higher amount for now.
Pandora will however, be discontinuing annual subscriptions. Yearly subscribers, who currently pay $36 per year, will be moved to a monthly “loyalty” plan at $3.99 per month once their current subscriptions expire.
Pandora notes the fee hikes should affect an estimated 3.3 million listeners, the bulk of the services 250 million registered users access the free, ad-supported service.
“The costs of delivering this service have grown considerably,” Pandora said on its blog on Tuesday. “We hope that you understand why we have taken these steps. Our goal is to continue to be your go-to internet radio destination.”
Pandora – one of the world’s most popular music streaming services – faces competition from such services as Spotify, and Apple’s own iTunes Radio. However, the company reports that year-over-year active listeners were up by 12%.