Pandora Case Reflection

Re: How to fix our “leaky faucet”?

Good Afternoon All,

            This email is in regards to an issue we have been facing lately that has become our main roadblock to success. Last week we had our consultants come in to help us examine our options on a way to fix this issue. Fortunately we have been growing at a tremendous pace and this is good. Unfortunately, these “free” users have no concern whether their app is left on or not. They do not take into consideration that webcasters such as us have to pay royalties every time a song is played or skipped through. I was very pleased with the option presented to us and to be honest, could not sleep much trying to convince myself to pick one. I think this should be a collective decision based on what each one of us think.

            At first glance, I was very inclined to go with a hybrid approach to this. I thought to myself, option 1 is most likely a surefire way to increase revenue to help cover our costs. We could offer local advertising that would be available based off a users data entered at the time of sign-up. The downfall I saw to this situation which was mentioned by Ed was that we would slowly push away customers because too much intrusive advertising would push away users. This is where I got the idea of this hybrid model. We push for advertising to increase revenue but at the same time we incorporate the “freemium” model. In order for customers to avoid the annoying commercials, they could pay a premium and become a super-user. I was sold that this was the best method until I did some brainstorming and thought maybe we should take a different approach to this.

            Let’s think about this from a different angle. Majority of users that listen to Pandora are most likely listening to the music from their iPhone or iDevice which allows it to play. It is safe to say that the rapid growth of apple users can also be credited to some of the rapid growth of Pandora users. That’s when it dawned on me that maybe the best idea is to have Apple and Pandora work in tandem with one another. It would have potential where Pandora users would have the option to buy a song from the iTunes store. Apple users would be inclined to register to Pandora and Pandora users would be inclined to purchase a song from the iTunes store if they liked it. This would be a win-win situation because advertising from both sides would increase revenues allowing both sides to prosper. Please feel free to add to any of my arguements to help strengthen this side or if you feel differently, we are all ears.

-Alexander Slavtchev