...E-commerce and e-business Introduction Pandora offers online radio subscription services. Glaser and Westergren founded Pandora back in 2005. According to Kenneth and Traver (2012), Pandora has over 80 million registered users and continues to add about 600,000 subscribers a week. The firm accounts for over 50% of all online radio listening hours. When I read about Pandora offering a radio service, I first though about news but it wasn’t event the case. It’s all about music from a radio that doesn’t work like the one we always listen to that I will refer to as traditional radios for the purpose of this case study. With Pandora, the users select a genre of music they want to listen to and a computer program determines all of types of music related to along with other artists they might be interested to listen to their music. I will first compare describe Pandora’s original business model as well as its current business model, and then compare the two business models. I will also discuss if Pandora would have been successful if it had started out originally using another business model. I will therefore explain some of the concepts related to the case study such as free revenue and freemium revenue models. I will question the assumption that free revenue models have a predominant place in e-commerce. Pandora’s business models When Pandora was founded, the firm first business model was to offer its users 10 hours of free access as bait and then asking them to...
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...Case Study 2.6—Pandora Pandora radio originally operated as a freemium business model but soon switched to an ad-supported free business model. The difference between the two is what quadrupled their revenue. Pandora offers a unique customer value proposition. MailChimp succeeded with a freemium model but Ning did not because MailChimp was able to deal with issues because free products are ripe for abuse. When Pandora opened in 2005, they offered users 10 hours of free radio, then a year’s subscription for $36 per year. “In the first couple weeks we had 100,000 people come through and the vast majority listened to every last minute of their free ten hours,” said CTO Tom Conrad. “Then we asked them for their credit card and they would wander off into the wilderness.” (Gannes, 2010). They quickly switched to an ad-supported model. It was ad-supported in name only, however, because they had no ad server, no ad staff — not even a place on their page to put ads: But growth quadrupled overnight, and within three days, Apple called and asked to buy out ad inventory through December (Gannes, 2010). Pandora’s customer value proposition is an uncanny algorithmic ability to predict the music their customers want to listen to, and unlimited free musical content for those that don’t mind listening to advertisements ("Pandora and a," 2012). For freemium models, it was difficult to succeed for one main reason. A 354 percent increase in abuse-related issues like spamming, followed...
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...Case study 1 | Pandora | The Freemium Business Model | | Christian Ortiz | E-COMMERCE MODELS AND ITS APPLICATIONS MKT 640GEORGE ACKERMANOCTOBER 2013 | Pandora Pandora Radio started as Savage Beast Technologies and was founded by Will Glaser, Jon Kraft, and Tim Westergren. Later on after nearly failing, the company was renamed Pandora Media and launched Pandora Radio on July 21, 2005 (Arrington, 2005). Pandora is an internet radio service, recommendation service, and the custodian of the Music Genome Project. Pandora works by users entering a song or artist that they like, and the service responds by playing selections that are musically similar. Users provide feedback on approval or disapproval of individual songs, which Pandora takes into account for future selections (Crunch Base, 2013). The Music Genome Project is the backbone of Pandora Internet Radio. The goal of the Music Genome Project is to take music and boil it down to quantifiable data. Every song in the Genome’s library is analyzed by a musicologist, which is usually a musician with a strong backgrounds in music theory. The musicologist then breaks down and rates over 400 attributes of every song, from the “soulfulness” of the vocals to the rhythmic and key changes in a given song. These 400 attributes are combined into larger groups called focus traits, and there are 2,000 focus traits. Some examples of these focus traits are rhythm syncopation, key tonality, vocal harmonies, and displayed instrumental...
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...The Freemium Business Model Does it Work The Freemium Business Model Does it Work In a world where advancements are made every day, conscience efforts are given to affect change in the most peculiar ways. If a look backwards were to be taken one could see that from medicine to television changes that could have never been thought of, exactly were that, thought of. Creations are made and ideas are born. One direction that is always a consideration is how to attract more consumers into a specific market without scaring them away and turning a great revenue at the same time. While businesses advance as technology does at times, both are intertwined. With the advancement of technology including 3-d screens, descriptive color patterns and certain psychological focus points that attract a person’s unconscious mind to a specific product, the advancement of business practices must be the same in attracting certain detail of a product to that of making a person wanting more or feel as though they are receiving a special offer. Even if for a limited time. Many people who partake of services want the most up to date and the most opportune times available within today’s abilities. Granted, at a much faster pace, always on the move and too many appointments to complete in one day, the most is the best in the most convenient ways. More and more often than not, what is seen are special ads such as with premium channels on television; HBO, Cinemax or Starz all offer certain time frames for...
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...Pandora and the Freemium Business Model 1. Compare Pandora’s original business model with its current business model. What’s the difference between “free” and “freemium” revenue models? Pandora’s original business plan was to give away 10 hours of free music then after the free time is up then they had to subscribe to the service. The next attempt was to allow 40 hours free time then they had a choice to subscribe to the service or wait till the next month to sign up again. The third time they had affiliates and advertisement to help with the cost that was not able to get from the lack of subscribers. When one subscribed to the premium service they received better service from Pandora. In the “free revenue models” you give a locked version or allow a certain amount of time for the use of a product so that in hopes of getting the person to subscribe to the service, whereas in “freemium revenue models” you allow them to have the basic service for free then offer the premium service for a monthly fee. 2. What is the customer value proposition that Pandora offers? When the customer decides if one should pay for the service that Pandora offers, they see that when they upgrade to premium service they receive fewer usage limits, no advertisements, higher quality streaming music, and a desktop app. 3. Why did MailChimp ultimately succeed with a freemium model but Ning did not? MailChimp succeed because they gave away just the basics to entice the members to subscribe. They...
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...May 2014 1. Compare Pandora’s original business model with its current business model. What’s the difference between “free” and “freemium” revenue models? Pandora’s original business model was to provide users with 10 free hours of access to their website contents. Once the 10 hours has been used up, they will then be asked to subscribe to Pandora at a rate of $36 per month for continual access. Whereas, their current business model is designed where users can access their online radio for free as long as they sign up for an account, but are exposed to ads while streaming. The Freemium model is designed to give away some services to 99% of the customer base and rely on the other 1% of customers to pay for premium versions of the same service. In a business model, “freemium” basically means the basic version of a product or service is offered free to use, but is only limited to the basics provided, whereas “free” is the product/service is completely free access to the range of contents it provides. The revenue is then generated from targeted advertisings and displayed to users while they are on Pandora. 2. What is the customer value proposition that Pandora offers? Actual subscribers of Pandora will not be displayed advertisements and higher quality of music while streaming. The people who pays for Pandora has pretty much unlimited usage for $36 per year, while the people who are listening to music with Pandora for free are limited to only 40 hours of music per month...
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...David Raphael S. Pe ECOMMER K31 Pandora Case Study 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...
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...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....
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...Krystal Bante Case Study Chapter 2 1. In the beginning, Pandora tried to get music subscribers by giving people 10 free hours, then asking them to pay $36 a month after that for the service. Of course no-one was willing to pay so much for a service that they could get for free by switching on an FM radio. After that model failed they tried several other options until they decided to use the “freemium” model they are using today. With a freemium service the basic service is available for everyone for free, but with strict limitations in bandwidth and ads between songs which results in a lower quality listening experience. The premium service is priced at just $36 a year, 1/12 of their previous asking price. Three dollars a month is much easier for a consumer to justify. The premium service offers higher bandwidth songs and no advertising. 2. What Pandora does for its customers is provide access to music through the “Music Genome Project.” This project was started by the founders of Pandora and offers a way to classify music so that similar music by different artists will group together into what they call a personalized radio station. The music is evaluated by professional musicians for genre, and then within each genre 200-500 different data points are set for each song by the music professional. A function is used to identify the distance between songs so that similar songs can be included in a customer's playlist. A user can apply additional weights to promote or demote...
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...What jobs is Pandora doing for its customer? Pandora is giving customers a music listening experience. With the music genome project Pandora is able to offer customers similar music based songs depending on the users musical preference input. It gives it a surprise element to the music listening experience. Pandora is able to personalize music listening. Pandora is providing this experience free of charge. Pandora’s focused demographic based musical offering gives customers a wide array of music offering that they were not aware of before. Pandora provides this music through easy access websites and smart phone apps. 2. Who else provides these jobs for customers? Will Pandora disrupt these other providers? Pandora’s main competitions are 1. Similar companies who provide “freemium” music offering like spofity, iheart radio. 2. On demand digital music downloads like iTunes 3. Traditional radio stations and HD radio stations. 4. Online radio stations 5. Music CD’s Pandora’s competitive advantage is its music genome project technology. It has the ability to offer a unique musical experience that none of the other substitutes are able to do. The project is also highly recommended by music experts. They also introduce a high switching cost to the customer once the customer enters their music preference. With the key competitive advantage Pandora will disrupt a certain part of the demographics from the traditional offerings. Pandora attracts a age...
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...Instructor’s Manual: Chapter 2 E-commerce Business Models and Concepts Teaching Objectives • Identify the key components of e-commerce business models. • Describe the major B2C business models. • Describe the major B2B business models. • Explain the key business concepts and strategies applicable to e-commerce. Key Terms business model, p. 65 business plan, p. 65 e-commerce business model, p. 65 value proposition, p. 66 revenue model, p. 66 advertising revenue model, p. 67 subscription revenue model, p. 67 transaction fee revenue model, p. 67 sales revenue model, p. 67 affiliate revenue model, p. 67 market opportunity, p. 68 marketspace, p. 68 competitive environment, p. 72 competitive advantage, p. 72 asymmetry, p. 72 first-mover advantage, p. 73 complementary resources, p. 73 unfair competitive advantage, p. 73 perfect market, p. 73 leverage, p. 73 market strategy, p. 74 organizational development, p. 74 management team, p. 74 e-tailer, p. 78 barriers to entry, p. 78 community provider, p. 80 intellectual property, p. 81 content provider, p. 81 portal, p. 84 transaction broker, p. 85 market creator, p. 86 service provider, p. 86 e-distributor, p. 88 e-procurement firm, p. 88 B2B service provider, p. 89 application service provider (ASP), p. 89 scale economies, p. 89 exchange, p. 89 industry consortia, p. 90 private industrial networks, p. 90 industry structure, p. 93 industry structural analysis, p. 94 ...
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...Google Library project Khaled Deyab Cal University DBA in Health Care Management and Leadership Introduction Google Library Project's transforms the text into a comprehensive word index to facilitate searching and data mining in new areas. The use does not supersede or replace reading of books; it adds something new to the original work by using words to facilitate searching. It aim to make it easier for people to find relevant books specifically, books they wouldn't find any other way such as those that are out of print. At the same time will carefully respecting authors' and publishers' copyrights. The goal is to create a comprehensive, searchable, virtual card catalog of all books in all languages that helps users discover new books and publishers discover new readers. Users simply search for a book or topic using keywords and Google lists books from its database containing the search terms. Users can then click a book title to view “snippets” of books containing the term(s) searched. We are going to talk about Google Library Project and a history for their straggle in court. We are also going to talk about is it good or bad that Google is a United State corporation bound by U.S. laws., what is the “fair use” doctrine and if we think that Google defines it correctly in this controversy. We are also going to explain why some libraries are backers of the project, while others vehemently oppose it. Discussion Google Library Project's aim to make it easier for...
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...will conclude with a recommendation and a conclusion that will recap the major points of this analysis. Overview People do not read as much anymore. There are other options. YouTube streams videos on every topic imaginable. “Steve Jobs noted people don’t read anymore” (Laudon & Traver, 2012). “Forty percent of the people in the U.S. read one book or less last year” (Laudon & Traver, 2012). This is due to the numerous options of acquiring data and information. People are still being educated so what is being used in lieu of books? “e-book sales exploded in 2010, growing from 0.6% of book sales in the United States in 2009 to 6.4%” (Laudon & Traver, 2012). In 2002 Google began a digital library. The same way Pandora and The Pirate Bay benefited from advertising, Google did also. Problems arose when Google sought go put information on their servers that did not belong to them which brings up copyrighted issues. No royalties or fees were paid and this started Googles problems. Lawsuits were filed. This week’s case titled The Google Books Settlement will be the subject of this case analysis. This case analysis will discuss Google US Corporation: good or bad, fair use doctrine, and Libraries that back project the Google Books Project. This case analysis will conclude with a recommendation and a conclusion that will recap the major points of this analysis....
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...Spotify Analysis Sarah de Ferrari, Danielle deFerrari Bryce Simantel, & Christine Osazuwa 1 Spotify is a music streaming platform that was founded in 2006 in Sweden by Daniel Ek and Martin Lorentzon with the goal of providing music to everyone. They worked with a Swedish developer experienced with peer-to-peer framework with the intent of connecting the music listener directly to the labels. Due to the nature of that relationship there is a need to negotiate with music labels for launch on a country-to-country basis, starting with their initial launch in Sweden in 2008. They are currently available in 57 countries with a limited launch currently underway in Canada and the Phillipines. The basic service offered by Spotify is the ability for users to create custom playlists that can be played through any internet connection. Spotify has two distinct product offerings, Spotify and Spotify Premium. Spotify Premium members pay a monthly subscription fee but have access to their playlists offline on multiple devices, thus having all the perks of owning the music while just paying $120 a year. Beyond that, Spotify is known for their social media interaction – users can interact with their friends and share playlists, and users can also follow the playlists of their favorite artists. Songs can be found by title, artist, or cd name, and various apps are available to enhance the service, such as radio streaming. Sean Parker, founder of Napster, invested $15M in Spotify...
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