Why Is Pandora Scrapping Its Listening Limit?

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Aug. 22 (Bloomberg) -- Pandora Media on Sept. 1 will lift the limit on free mobile listening, introduced in March. Jon Erlichman has more on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

They implemented the cap six months ago to keep royalty costs under control.

This comes as they report second-quarter earnings.

Jon erlichman is closely following the story and why the change of heart?

It has a lot to do with the success they have had generating mobile revenue.

It has been very encouraging, north of $100 million coming from the mobile related business.

This is a company that as you pointed out six months ago said that one of our key problems, as you bring in more users , the royalties that you have to pay to music labels go up as well.

How do we control that?

Over the life of the cap, they have figured out better ways to handle that.

When you skip a couple of songs on pandora, capping the number of times you can skip is one way to control that.

The advertising team is getting better at selling the inventory.

There is an upside to allow that to go away and sell the advertising.

Pandora has seen a rise in the number of people paying for the subscription service.

Did that impact this?

Does that offset the other costs?

Pandora one if you don't want the ads, and that part of the business benefited because of the cap.

They basically said now they are taking the cap away, they think it will keep that number from climbing at the rate it has been climbing.

People will continue to listen as long as they like.

What about cars?

Are we seeing headway there?

Any of these companies right now, they have gone after the phone, the tablet, and now the dashboard is the next great place to look.

We hit the streets of l.a. to examine that story in a little more detail.

In los angeles, millions on the move and sometimes lower than they would like.

For drivers, it is a headache but for pandora, it is an opportunity.

Quacks we have an early lead as one of the top apps used in the car right now.

The new battlefield is the car, where half of all radio listening takes place.

Pandora comes preloaded on more than 100 vehicles from 23 different car brands.

It translates to 2.5 million people using pandora on the road.

Nearly all new vehicles, equipped with pandora.

Like the civics and accords sold each month.

Consumers are streaming all day long and want to keep a context of a going.

-- the conductivity going.

Quacks for apple, they want to push the brand and get inside the cabin of the car and become a very standard fixture.

Quacks the head start means that cars will have their service.

It is the number one radio station in l.a.. as for those of you stuck in traffic, our condolences.

Meanwhile, something interesting the company talks about is they went and bought a patent from yahoo tied to internet radio.

This text has been automatically generated. It may not be 100% accurate.

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