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Pandora Increasing Ads To Raise Revenue, But May Lose Fed Up Listeners To Spotify And Others

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It appears Pandora recently has been increasing the amount of ads it plays to listeners on its most popular unpaid subscription tier. The company, which recently reported huge losses, may be attempting to ramp up advertising revenue, although that could alienate subscribers and drive them to other services as a result.

While no official announcement has been made, anecdotal evidence culled from social media indicates a significant increase in the number of advertisements Pandora is playing. Some listeners are complaining that they have been subjected to as many as seven ads in a row, and others are claiming that they are now hearing more ads than actual music.

The company is clearly having trouble reaching profitability. Its most recent financial results shocked Wall Street with reported quarterly losses of $86.9 million, as opposed to a loss of just $2 million in the same quarter of the prior year. Pandora has also made two heavily criticized acquisitions recently. Besides picking up the pieces of the bankrupt Rdio streaming service for $75 million, Pandora has been slammed by observers for spending $450 million for ticketing service Ticketfly.

The increase in ads appears to be an attempt to increase company earnings, and while that may work in the short run, in the longer term it may only serve to alienate music fans who are being presented with various other streaming options, including the newly introduced Apple Music and YouTube Red streaming services.

Only 3.5 million of Pandora's listeners now pay for its premium tier, less than 5 percent of the total amount of Pandora subscribers. The company tallied 78.1 million active listeners as of the third quarter. Pandora may be hoping that customers fed up with all the ads may upgrade to the $5 per month Pandora One ad-free subscription tier. 

Music fans who are willing to pay a premium for streaming, however, may prefer instead to abandon the service altogether and cough up another $5 for Spotify or one of the aforementioned new streamers, which allow listeners to actively choose the music they listen to rather than passively select only by category or genre on Pandora. Spotify actually allows family members of subscribers to subscribe for a 50 percent discount, which means many listeners out there already  have the option of subscribing to Spotify for the same price as Pandora.

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