The 99 Cent Seismic Shift

September 14, 2009 in Music, Startup, Tech
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The following is a post I wrote for the T3 Blog.

I sometimes think I was the last person on Earth to fall in love with Pandora. It was a quick courtship—in just a matter of weeks, Pandora became the background music to my day. It didn’t matter if I was at work or at home, the world just felt silent without her. And once I found Pandora for Blackberry, we were joined at the hip. Literally.

It seemed perfect. I had found a limitless library of music that was sincerely interested in me. I would talk, she would listen. I would “thumbs up” Mos Def, and she’d introduce me to Atmosphere. I’d “thumbs down” The Offspring, and she’d remind me how much I loved The Darkness. It was summertime and I was in love. It was kismet. And it was free.

July 7th started off like any other Thursday, but that morning I got an e-mail that I’ll never forget. Pandora was leaving me for someone new. His name? “Revenue”.

I was crushed.

Our favorite Web sweethearts, YouTube, Facebook, Digg and (my favorite) Twitter, all operate in the red. Despite their rock star status and the seemingly endless amount of time I spend on these sites, not a single one has turned a profit. Emulating King Gillette is a great game plan, but why give away the razors when you have no clue how to make a blade?

Lately, we’re seeing more companies try to buck the trend. Small startup 37signals and their hugely popular project management tool Basecamp has been charging from day one. On the other end of the spectrum, global media mogul Rupert Murdoch plans to build an online pay wall for the New York Post and Wall Street Journal in 2010.

But will anyone actually pay? More importantly, will I pay for Pandora after having my heart broken? On the Internet, the gap between $0.00 and $0.01 is a chasm, and we’ve been trained to expect the former. Pandora’s new $0.99/month charge for access to more than 40 hours of music (or $36/year for unlimited music via Pandora One) is absolutely miniscule, but I still remember a fraternity brother strolling into my room a full 10 years ago babbling about free music and some program called “Napster” that some kid down the street had built.

As a die-hard geek, this was a watershed moment for me. Am I really going to pay for music? A co-worker (and fellow Pandora user) summed it up best in an IM, “Mark–you could pay that 99 cents, or, maintain your dignity. Time will tell…”.

So what did I decide? Let’s just say I’m one hour away from hitting my 40-hour quota for September, and for the second month in a row I’ll be selling my geek dignity for the price of a Biggie fries.

I’m sure my Commodore 64 is rolling over in its grave, but paying for a service this good actually feels right. And if an early adopter like me is okay with it, what does it mean for the mainstream? After an atrocious 18 months for tech companies that saw many enter the deadpool, expect many of the survivors to start charging monthly subscriptions. I’d also bet we’ll see companies in different industries band together with package deals, “Get music from Pandora, news from the Post, traffic alerts from Fox, and weather alerts from AccuWeather for just $9.99/month with the SuperGloboTron Everything Plan!”

So how does that saying go? “Once is an aberration, twice is a trend”? After two months of ponying up, be sure to check back in to see if I crack the wallet open in October. I’m pretty sure three times represents a seismic shift.

3 Comments to The 99 Cent Seismic Shift

  1. Yes, first they take away the mini player that I came to love and then hit my quota. I have not visited Pandora since. I have recently been turned on to grooveshark.com

  2. jrea on 17 September 2009
  3. From 22 immutable laws of marketing:

    You should never offer your product for a discount. In the mind of the consumers you became worth your discounted price (say 50 cents), they will never pay full price for you ($1) because you have solidified in their mind your place as a 50 cent product. Pandora was known for free music.
    Invoking a billed price will only have users flock to another site “Jrea: grooveshark.com” which I’m sure is very eager to take over some pandora traffic.

  4. wesley on 17 September 2009
  5. Taking away features (I miss the desktop player, myself) is absolutely asinine, but I haven’t found any engine as in tune (heh) as Pandora. And ignoring the quality, unless your name is Google, you can’t survive on advertising alone.

    Musicovery was my first love but is now dated, and last.fm is an absolute joke. I’ve heard a lot of good things about grooveshark recently–I’ll check it out.

  6. Mark Phillip on 17 September 2009




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