1. Compare Pandora's original business model with its current business model. What's the difference between "free" and "freemium" revenue models?

Pandora originally started with a subcription type of business model wherein users must pay $36 per month after they have used up their 10 hours of free access. The original model used was the free trial type. What happened was after the free trial of 10 hours was used up, the customers were unwilling to pay for the subscription fee. Now, the new and current model being used by Pandora is the freemium business model. The new model offered users longer time limit in using their features, which could be used again in the next month and so on. They gave the users 3 options after the free time was used up. It was either (a) to pay $0.99 for the month, (b) sign up for a premium service offering unlimited access, and (c) do nothing and wait for the next month to come, which was said previously. The new model turned out to be successful and was able to double the profits for Pandora.

The free revenue model offers a free trial of a product/service for a limited time. After the users have used up the free trial period, the company now will charge the user in order for him/her to continue the use of the company’s products/services. The freemium revenue model, in the other hand, offers the user unlimited free access but only to limited features of the company’s products/services.