Pandora recently capped the amount of free usage they will allow a user to experience within a month (a measly 40 hours). As a customer using the service at work I find the new policy extremely frustrating. Although Pandora does offer the ability to buy more time ($.99 for the rest of the month), pay for a year ($36) or stop using the service until the next month begins. I feel like they are missing a serious opportunity while at the same time offending and alienating some of their best customers in the process.
Teaser time (even if it is sizable) is the way the offline economy works. If I wanted samples I would go to Costco. I'm on the web I want free. Even more perplexing is that I'm someone really interested in marketing. I often welcome the opportunity to be "intruded" on by advertisements in my day today life. Considering that Pandora keeps advertisements so unobtrusive they can be missed, why would I spend money to avoid them? Finally, why would I pay for premium service when I have a free broadcast radio (paid for by advertising) sitting on my desk?
Pandora should take advantage of their captive audience by running interruption ads 3 minutes for every hour the service is used. Not only would my exposure to the advertisers increase, but also my loyalty to the system would remain in tact. This would help Pandora in another way too. The premium service would actually create value for some consumers. Due to the current method most of my co-workers are going around the system (deleting cookies) or finding new solutions to their radio need (i.e. broadcast, CD's, and ipods).
I feel like Pandora came up with a panic solution. It looks good on its face, but they actually created a huge opportunity for a competitor to compete successfully. Myspace made similar missteps by ignoring Facebook.