Pandora adds 40 hour monthly cap

Pandora founder Tim Westergren sent out an e-mail to Pandora newsletter subscribers and journalists updating Pandora users on several important topics regarding the company.

After 2 years of negotiations, Pandora and the record labels have agreed upon a resolution related to the Internet radio royalty fees, Westergren said in his e-mail. 

Pandora pays royalties for each song played and per listener using the service, which typically adds up extremely fast.  Unfortunately as part of the agreement, Pandora will now cap its listening per month at 40 hours per month, which will affect around 10 percent of the company’s listeners. 

The company will offer two alternatives for heavy Pandora listeners who want to continue using the service:

Users can keep listening when the 40-hour per month cap has been reached by paying $0.99 for unlimited access for the rest of the month.

The second option is the Pandora One service — which costs $36 per year — but includes unlimited listening, no advertisements, higher-quality 192 Kbps streams, a custom desktop application, personalized skins, and other features.

As one of the 10 percent of heavy Pandora users — I listen to Pandora almost every time I sit at a PC for more than 10 minutes — I’ll end up trying both the $0.99 per month plan to get unlimited music, but will ultimately upgrade to Pandora One at some point.  Considering the number of hours I use Pandora, paying $36 per year is well worth the cost for the higher quality tracks, custom application, and the rest of the goodies.

If you’re a Pandora listener, what will you do?