Pandora increases monthly subscription fees to $5, kills annual subscriptions altogether

Pandora is raising its fees for premium subscribers and starting in May, new users who sign up for ad-free radio will have to pay $5 per month.

In other words, new subscribers who join the service in May or later will have to pay $1 more than the current rate. The company's premium service is called Pandora One and allows users to enjoy ad-free internet radio.

Pandora explains that it has to charge more for the monthly rates because its operating costs have increased since it first started providing ad-free internet radio back in 2009.

"We've been fortunate enough to be able to offer Pandora One at an affordable price since its debut in 2009 at $36 per year and later with the introduction of a monthly subscription for only $3.99 per month. Over the same period, the costs of delivering the service have grown considerably," explains the company.

Pandora goes on to detail how it pays royalty rates to performers via SoundExchange, and those rates for subscription listening have increased 53 percent in the last five years. Moreover, they will continue to grow another 9 percent in 2015.

"In order to continue to provide an ad-free listening option, we are implementing some changes to the way we price Pandora One, including a modest price increase for new Pandora One subscriptions."

Aside from increasing the monthly subscription fee to $5 for new users, Pandora is also ditching its annual $36 subscription option. Starting in May, all current premium users with an annual subscription will be shifted to a monthly rate after their subscription ends.

Loyal Pandora users, meanwhile, will not be affected by this new price increase. Pandora will continue to charge loyal subscribers $4 per month, and this rate will also apply to last-minute users who sign up for the ad-free service before May.

"Our listeners are our top priority and, while this affects only a small percentage of our subscribers (3.3 million subscribers of more than 250 million registered users total), we hope that you understand why we have taken these steps. Our goal is to continue to be your go-to internet radio destination and enable you to hear the music you love wherever and whenever you want."