Pandora Reflection

As a C-level for the Pandora case, I was happy to hear some of the alternatives that the consultants produced.  I was pleased to see that all the alternatives produced a positive net increase in revenues.  I still was not convinced if these alternatives solve the problem at hand that I mentioned in my pre-class blog.  How is Pandora going to increase their net income?  This means increasing revenues without increasing costs or decreasing costs while maintaining revenues.

The suggested plan of action was to combine alternatives 2, 3, and 4.  These alternatives were to develop a mobile application, implement a tier structure, and usage of proper audio advertisements.  I agree that Pandora needs to implement those three alternatives, but I think if they were to combine those three, the first alternative of using social media should be used as well.   The amount of users of Pandora has increased consistently over the years, but is that a number that will consistently increase with competitors, such as Apple, finding new ways to break into Pandora's market share.  I think that if social media was used appropriately, the fact that it is free source of advertisement when people like songs and share with their friends.  It might be a reason for someone who has previously not been exposed to Pandora to check out what there is to offer. 

I don't think there is a question about the tier model option here, but it is just something that will flourish as Pandora uses the Audio Advertisements in correlation with the tier model.  I'm thinking that the tier model should be redesigned to appeal to people that listen for more than 40 hours because those are the customers that Pandora wants to keep.  Maybe offer a tiered pricing system that correlates with the amount of hours that a user listens to Pandora.  Keep your loyal customers happy, save them money, and provide them the opportunity to continue to explore their musical interests in a way where they feel they are saving money.

As for audio advertisements, my suggestion as a C-level was to flood the free service with them because people will then understand that this is why it is free.  People will not be upset, they will just understand that they need to pay for Pandora if it is such an issue.  ALL FREE SERVICES HAVE ADVERTISEMENTS!  Freemium is something that Pandora needs to leave in the past if they want to be a company that stays with us.  I believe that the amount of data that Pandora has collected to link songs/artists of similar tastes be listened to/ discovered/ exposed to the general public in a way that users demand.  Being a first mover into this market should not be looked at like a disadvantage.

Selling the company = Not an Option! Bottom line.

Overall, I feel that Pandora needs to change there business plan.  I got a feeling that the thing that has been holding Pandora back is the fact that the owner wants to maintain a serendipitous listening experience.  This isn't Napster, this isn't free radio, this is the music industry.  Consumers need to understand that the artists that produce the music they listen to and enjoy  need to make money as well.