Pandora Freemium Model Essay example

1118 Words Aug 3rd, 2014 5 Pages
Michelle Resendes
Managing E-Business BA351
07/13/2014

Pandora‘s business model consists of actions that lends the company to operate as a B2C, content provider, e-commerce site. Both the original business plan and the secondary plan in late 2005 supported the consumer market of “enjoying accessible music”. In assessing Pandora’s two business models you see that most of the originating or base elements stayed the same in each model but some key elements changed. These element changes were major catalysts in leading Pandora through its venture from a company who in late 2005 was faced with major financial issues, to in 2013 the most successful business for subscription to radio service. Pandora coming into the race had a first
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Pandora adjusted its path and in the second business model they enacted the “ Free” revenue model which focused on an advertising revenue plan for the company. By focusing on operating the company on the revenue from other businesses willing to pay for advertisement space, Pandora was able to offer its service for “ free” to its subscribers. Under the Free Model there were tiered payment options. After your initial 40 hours of music you had three options: 1. Choose to stop listening until the next month when you are reset to your allotted 40 hours. 2. Pay for a short term upgrade for $.99 to listen for the rest of the month. 3. Become a member of a premium service that allowed for unlimited listening. These options made Pandora more appealing and marketable to potential clients. The second business model with the addition of the Buy Button (2006) created three different revenue avenues to Pandora (subscription, advertising and now affiliate fees revenue.).
Technically because Pandora offered the premium services or expanded services to clients willing to pay for their upgraded accessibility Pandora’s revenue model is considered “freemium” ( Free and Premium combined) not just “free”. The objective of Freemium is to give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer

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