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Pandora Mobile Cap May Have Increased Slacker Radio Usage

On Thursday, Pandora rival, Slacker, said that more than six million new users joined since its relaunch on February 13, 2013, 3.5 million of which were on mobile devices. Since then, users have increased their average listening time by 25 percent. The mobile app is now installed on more than three times as many iOS devices. More than 100,000 new paid subscribers have joined, the company added.

"Slacker is the only digital music service that has billing and distribution deals with every major North American wireless provider, including Verizon, AT&T, Sprint, T-Mobile and U.S. Cellular," the company said. "In addition, Slacker is available in vehicles produced by major automotive manufacturers including Ford, GM, Chrysler Group, Acura, Honda, Scion, Subaru and Tesla."

Slacker's reboot couldn't have taken place at a better time. Just days after, Pandora founder Tim Westergreen said that the company would implement a 40-hour-per-month limit on free mobile listening. He blamed the cap on an increase in the per-track royalty rates, reporting that they have increased more than 25 percent over the last three years – 9 percent in 2013 alone. Rates are expected to increase 16 percent in the next two years.

"This is an effort to balance the reality of increasing royalty costs with our desire to maximize access to free listening on Pandora," he said. "We will be sure to alert any of our listeners that start getting close to the 40 hour limit."

On Thursday, Slacker CEO Jim Cady said his music streaming service has seen record growth since February and a definite uptick in users around March. "At a certain point, you just have to put two and two together and realize that Pandora users are leaving [for Slacker]," he told VentureBeat. "We’ve been able to monetize users with free accounts without placing limits on how many hours you can listen to radio content before getting capped."

Slacker Radio was founded in 2004 and then launched in March 2007 after landing deals with Sony BMG Music Entertainment, EMI, Universal, and Warner, along with thousands of Indie labels. The streaming music service allows users to create and share customized music stations, but it also offers more than 200 expert-curated "Genre" music stations spanning over 13 million songs and talk radio programming.

Slacker users have a choice of three tiers: free, ad-supported custom smart radio stations with limited skipping; a $4/month "Plus" model with no ads, unlimited song skips, mobile station caching, song lyrics and access to ABC News and ESPN; and a $10/month "Premium" model which adds to the "Plus" package with Songs On Demand, Albums On Demand, stations based on single artists, cached albums and playlists, and the ability to create playlists.

"We’re thrilled with the results of our relaunch; since mid-February millions of new people are tuning into Slacker, they’re spending more time listening, and our paid subscriber base is growing fast," Cady said. "And with our proven business model, Slacker is the only digital music service that is gross margin positive on every listener – whether they’re ad-supported or a paid subscriber."