A freenarginal cost approaching zero, to support free users. It also makes sense for A freemium strategy makes sense for companies such as Pandora, where there is a very low where the value to its potential customers depends on a large network, like Linkedin, who are willing to pay, like Pandora , especially when there are other Freemium also works when a business can be supported by the percentage of customers advertising fees that can make up for shortfalls in subscriber revenues. The freemium music streaming services don't have to worry about their business being sound strategy, but they do have to worry about industry goliaths like Apple and the record labels taking a stand against them. Case Study Questions 1. Compare Pandora's original business model with its current business model. What's the difference between "free" and "freemium" revenue models? 2. What is the customer value proposition that Pandora offers? 3. Why did MailChimp ultimately succeed with a freemium model but Ning did no 4. What's the most important consideration when considering a freemium revenu model?

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A freenarginal cost approaching zero, to support free users. It also makes sense for A freemium strategy makes sense for companies such as Pandora, where there is a very low where the value to its potential customers depends on a large network, like Linkedin, who are willing to pay, like Pandora , especially when there are other Freemium also works when a business can be supported by the percentage of customers advertising fees that can make up for shortfalls in subscriber revenues. The freemium music streaming services don't have to worry about their business being sound strategy, but they do have to worry about industry goliaths like Apple and the record labels taking a stand against them. Case Study Questions 1. Compare Pandora's original business model with its current business model. What's the difference between "free" and "freemium" revenue models? 2. What is the customer value proposition that Pandora offers? 3. Why did MailChimp ultimately succeed with a freemium model but Ning did no 4. What's the most important consideration when considering a freemium revenu model?

Answer 1

1. Pandora's original model was subscription-based, while the current model is freemium.2. The free model generates revenue through ads, while the freemium model combines free services with premium paid options.3. Pandora offers personalized music streaming with a large library and tailored playlists.4. MailChimp succeeded with freemium due to its valuable service and effective conversion strategy, while Ning failed due to low conversion rates.5. The most important consideration for a freemium model is the ability to convert free users into paying customers.

Answer 2

1. **Pandora's Business Models**: - **Original Model**: Pandora initially operated on a subscription-based model where users had to pay to access the service. - **Current Model**: Pandora now uses a freemium model, offering basic services for free with advertisements and premium services for a fee. This shift allows them to attract a larger user base and monetize through ads and premium subscriptions. - **Difference**: The key difference is the shift from a purely subscription-based revenue model to a hybrid model combining free (ad-supported) and premium (subscription) services.2. **Free vs. Freemium Revenue Models**: - **Free Model**: Users access the service at no cost, and the company generates revenue primarily through advertisements. - **Freemium Model**: Basic services are free with ads, but users can pay for premium features, such as ad-free experience, higher quality, or additional functionalities. This model aims to convert free users into paying customers over time.3. **Customer Value Proposition of Pandora**: - Pandora offers personalized music streaming based on user preferences and listening habits. The value proposition includes a large music library, personalized playlists, and the convenience of discovering new music tailored to individual tastes.4. **MailChimp vs. Ning with Freemium Model**: - **MailChimp's Success**: MailChimp succeeded because it offered a valuable service (email marketing) that small businesses needed and were willing to pay for as they grew. The freemium model allowed users to start for free and upgrade as their needs expanded. - **Ning's Failure**: Ning did not succeed with the freemium model because it struggled to convert free users into paying customers. The perceived value of its service did not justify the cost for many users.5. **Important Consideration for Freemium Revenue Model**: - The most important consideration is the ability to convert free users into paying customers. This requires a clear value proposition for premium features, a large user base, and effective strategies to encourage upgrades. Additionally, the cost of serving free users should be sustainable through ad revenue or other means.

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