Pandora to Raise Subscription Prices

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Ad-free music streaming service Pandora One will cost $1 more per month.

Pandora is raising the price of its ad-free music streaming service. 

The company posted on its blog late Tuesday that the price of Pandora One for new subscribers will increase by $1, to $4.99 per month, beginning in May. Existing subscribers will continue to pay $3.99 per month for the service. 

Pandora has also offered an annual subscription fee of $36 -- which equals $3 per month -- since 2009. The company is ending that annual subscription service and converting all existing annual subscribers to the $3.99 per month fee. 

Pandora attributed the fee increase to the rising price of music royalties, adding that the royalty rates for subscription listening that it pays performers through SoundExchange have increased 53 percent in the last five years. The company expects those rates to increase another 9 percent by 2015. 

"Our listeners are our top priority and, while this affects only a small percentage of our listeners (3.3 million subscribers of more than 250 million registered users total), we hope that you understand why we have taken these steps," the company wrote in the blog post. "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."

Pandora shares opened Wednesday up 56 cents, or 1.6 percent, at $35.54 on the New York Stock Exchange.