Pandora Radio: Fire Unprofitable Customers? Case Solution & Answer

This Case is about CUSTOMERS, DISRUPTIVE INNOVATION, ENTREPRENEURIAL MANAGEMENT, GROWTH STRATEGY, INTERNET, SALES, STRATEGY EXECUTION, VENTURE CAPITAL

PUBLICATION DATE: March 02, 2010 PRODUCT #: 610077-HCB-ENG

Pandora Radio is at a crossroads. Creator Tim Westergren has actually simply been informed by a popular VC to obtain rid of his unsuccessful customers in order to get his expenses down, however Westergren is uncertain that such actions follow his business’s company design Pandora Radio is the biggest Internet music stream website, and its quickly growing user base enjoys the complimentary adjustable music stream under a marketing supported design.

Pandora needs to pay royalties for each tune streamed, and has other variable expenses that scale linearly with hours taken in, however it has actually taken no actions to limit the quantity of use amongst its heaviest and most faithful users. Can Pandora make its design work when a substantial portion of its users trigger it to lose cash?

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