Pandora 2016 Annual Report Download - page 59

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For the twelve months ended December 31, 2014 compared to the eleven months ended December 31, 2013, total ad
RPMs increased primarily due to an increase in ad RPMs on the mobile and other connected devices platform.€Ad RPMs on the
mobile and other connected devices platform increased as advertising revenue growth outpaced the growth in advertising
listener hours as a result of an increase in the average price per ad sold on that platform, due in part to our increase in relative
volume of local ad sales.
Total Subscription RPMs
For the twelve months ended December 31, 2015 compared to 2014, total subscription RPMs increased primarily due to
an increase in subscription RPMs on the mobile and other connected devices platform. Subscription RPMs on the mobile and
other connected devices platform€increased as the growth in subscription and other revenue outpaced the growth in subscription
listener hours, primarily due to an increase in the average price per subscriber as a result of the increase in the Pandora One
pricing structure and an increase in subscribers.
For the twelve months ended December 31, 2014 compared to the eleven months ended December 31, 2013, total
subscription RPMs€increased as the growth in subscription and other revenue outpaced the growth in subscription listener hours
on both the computer and the mobile and other connected devices platforms, primarily due to an increase in the average price
per subscriber as a result of the increase in the Pandora One pricing structure. In addition, the changes in subscription RPMs for
the€twelve months ended December 31, 2014€reflect a $14.2 million increase in subscription revenue in connection with the
one-time recognition of the accumulation of deferred revenue related to certain subscriptions purchased through mobile app
stores. Refer to “Deferred Revenue” below for further details regarding these mobile subscriptions.
Total Ad LPMs
Total ad LPMs in the twelve months ended December 31, 2015 compared to 2014 increased as the growth in cost of
revenue - content acquisition costs outpaced the growth in advertising listener hours. Cost of revenue - content acquisition costs
increased by $65.4 million in the twelve months ended December 31, 2015, of which $57.9 million was related to a one-time
cumulative charge to cost of revenue - content acquisition costs for the pre-1972 sound recordings settlement. In addition, cost
of revenue - content acquisition costs increased by $28.2 million in the twelve months ended December 31, 2015, of which
$23.9 million was related to a one-time cumulative charge to cost of revenue - content acquisition as a result of our decision to
forgo the application of the RMLC publisher royalty rate from June 2013 to September 2015. Total ad LPMs also increased as a
result of scheduled rate increases for sound recordings paid to SoundExchange.
Total ad LPMs in the€twelve months ended December 31, 2014€compared to the€eleven months ended December 31,
2013€increased primarily due to scheduled rate increases for sound recording royalties paid to SoundExchange.
Total Subscription LPMs
Total subscription LPMs in the twelve months ended December 31, 2015 compared to 2014 increased as the growth in
cost of revenue - content acquisition costs outpaced the growth in subscription listener hours. Cost of revenue - content
acquisition costs increased by $65.4 million in the twelve months ended December 31, 2015, of which $57.9 million was
related to a one-time cumulative charge to cost of revenue - content acquisition costs for the pre-1972 sound recordings
settlement. In addition, cost of revenue - content acquisition costs increased by $28.2 million in the twelve months ended
December 31, 2015, of which $23.9 million was related to a one-time cumulative charge to cost of revenue - content
acquisition as a result of our decision to forgo the application of the RMLC publisher royalty rate from June 2013 to September
2015. Total subscription LPMs also increased as a result of scheduled rate increases for sound recordings paid to
SoundExchange.
Total subscription LPMs in the€twelve months ended December 31, 2014€compared to the€eleven months ended
December 31, 2013€increased primarily due to scheduled rate increases for sound recording royalties paid to SoundExchange.
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