As a global community of internet users, most people have gotten used to the idea of a freemium model. We know that if you want something for free, you’ll have to put up with certain features that might be annoying to some, but that you can pay to rid yourself of if you choose. For example, the Amazon Kindle reader with ads and free email providers like Yahoo! incorporate advertising into their platforms in order to offer their users something at a lower price; if readers or email clients don’t want to put up with the ads, they have the option to pay a subscription or a higher fee and do away with them.
As digital radio service providers work to keep their customers in a growing field of competition, the face of how those accounts work is changing. Pandora announced this week that one of its more innovative concepts in free listening has moved out of a very positive beta trial period and is now available to all of its mobile app users.
Called “Sponsored Listening,” this could easily change the face of free trials, freemium models, and other online or mobile app pricing. Rather than the original model most music services employ of injecting advertisements in the listening stream–very much like traditional radio–Pandora has announced that Sponsored Listening lets users get it out of the way up front in exchange for an hour of uninterrupted music. By interacting with a multimedia ad for a minimum of fifteen seconds–although some go on as long as a couple of minutes–users can basically “chunk” the ads into one time frame and then enjoy their music.
But how effective can this be? According to an article for TechCrunch, Pandora says “its ad revenue [this past quarter] accounted for $230.9 million out of total revenue of $285.6 million, representing a 30 percent year-over-year increase. In addition, total listener hours were also up by 5 percent year-over-year to 5.30 billion.” The company went on to state that “Sponsored Listening accounted for a 12 percent lift in brand awareness for its advertisers, and a 30 percent lift in purchase intent. The company says the option also resonated with consumers, noting that – even though it was only tested with a small subset of Pandora’s user base – over 4 million unique listeners chose to try the option.”
With this model seeming to resonate with users, it will be interesting to see what other tech and software portals follow suit. We may soon see a single longer block of targeted advertising in things like digital newspaper sites and email platforms, for example, or to have longer free-trial periods in exchange for taking one quick survey. And in a world where advertising is crucial to keeping computing accessible to as broad an audience as possible, this beta period seems to demonstrate that users will respond in kind.