Case study:

Freemium Takes
Pandora Public
Group members:
Joo Hye Soo
Bui Phuong Anh
Nguyen Thuy Duong
Pham Vy Le
CASE STUDY SUMMARY
HISTORY OF
PANDORA

ABOUT
FREEMIUM

TIMELINE OF
PANDORA

SUCCESSFUL &
UNSUCCESSFUL EXAMPLES
OF PANDORA

CONCLUSION
HISTORY OF PANDORA

Founders: Will Glaser and Tim Westergren

As of June 2016:
Pandora:
Launchedmost successful internet radio service
at: 2005
Had 250 million registered users with 80 million active users
It was made to reduce the illegal download of music and charged
2015: 21 per
99 cents billion hours
song and of music were
provided streamed
the idea by theradio
of personal usersstation
to the users
ABOUT THE FREEMIUM

- Freemium: giving product or service for free and get the

profit from the customer who uses it for premium

Since marginal cost of digital products is almost zero so providi

ng free product to customers did not cost much

This can attract more users and also premium users which
brings profit to the company
TIMELINE OF PANDORA
Pandora provided 10 hours for free at first and 100,000 users use
d their 10 hours and refuse to pay for annual services and resulte
d financial collapse

They introduced ad-supported option at November 2005:

a) Pay 99 cents per month after using 40 hours of listening
b) Premium service offering unlimited usage
c) Just listen to 40 hours only and wait for another 40 hours for n
ext month

This attracted many users and advertisers including Apple to pay

for it
TIMELINE OF PANDORA
Absorption
Still yet to of Rdio and
reach Apple
Added BUY Reputation
stock launched
option to Had increased.
price and their own
each song added Reached
slowly streaming
which app for 20 million
dropped service
directs users iphone users
to Amazon, users
iTunes, and
more

2008 2008 2009 2014 2015

SUCCESSFUL & UNSUCCESSFUL EXAMPLES OF
FREEMIUM

Unsuccessful example of freemium:

2009,
Successful
they give
example
basic of
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MailChimp
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marketing
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incr
It had lowest priced charged and even introduced free option
eased 650%
It had more subscribers of 11% compare to the competitors with 3% to
They are recently having 8 million subscribers and sending over 200 billi
5%
on e-mail
But they were not able to keep up with the sudden increase in data pro
cessing and customer canceled their subscription
CONCLUSION

Freemium is for product which is easy to use and has large pot-
ential users

This is truly a good tool to attract the users with free options of
fered and more attractive than the free trial services

Need to have long-term customer

It is good for companies with low marginal cost and who can su
-pport free users
PROBLEMS COMPANY FACED

Pandora gave away 10 hours of free access,

and then ask users to pay $36 a month for a
year after they used up their free 10 hours.
THE 1ST PROBLEM The result: 100,000 people listened to their 10
hours for free and then refused to pay for the
annual service.

Pandora has not yet shown a profit, and

THE 2ND PROBLEM its stock price has steadily dropped since
its high in 2014

Apple music appear. At 1st Apple was their

partner, Pandora directed their users to
THE 3RD PROBLEM Itunes. In 2015, Apple launched their own
streaming service, and became Pandora’s
competitor.
THE COMPANY’S SOLUSIONS

The 1st problem: Introduce an ad-supported option.

Give customers 40h/month free streaming. After 40h,
customers might choose sign up premium package or do
nothing and register next month.

The 2nd problem: Made a flurry of acquisitions in 2015, including

on-demand music service Rdio. Absorbing Rdio signified Pandora’s
ambitions to directly compete with Spotify in on-demand music
streaming, as opposed to focusing primarily on its radio model.

The 3rd problem: Although Apple Music appears to be a

strong competitors to Pandora, analysis still point out the
steadily increase in users monthly of Pandora.
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LESSONS FROM CASE STUDY

Business in Vietnam could apply “Freemium” into business with some

adjustment to become more suitable with Vietnam’s market.
For example, there is another music streaming site has the same business
model with Pandora, it is Nhaccuatui.com. This website also provides users
with loads of songs which are available to download and together with it,
they also have premium package for better music quality, and additional
services. However, because of having too much songs being able to
download freely and there are still holes in their system make the number
of premium users remains modestly.
From this case, Nhaccuatui.com can apply other solutions such as, limit the
range of free songs, create more convenient services for premium users, and
so on.