I’m voting with my wallet and giving Pandora $36

Last week I quit being a user of Pandora, and they couldn’t have been happier. Why? Because I became a customer, paying $36/yr for their new Pandora One (P1) service. Is P1 such an awesome improvement over their free service that i felt compelled to upgrade? Actually no, while the P1 bells and whistles are nice, it’s not that much different than vanilla Pandora (mostly because free Pandora is already damn good). Rather I whipped out my credit card and gave Tom my money because Pandora is a company that I want to support, one which treats their customers well, cares about their product and has to deal with very tough partners – the music labels.

This experience is why I strongly agree with MG’s TechCrunch article about freemium services. He writes “rather than launching a service with a freemium model, I think it’s important to gain a large and passionate user-base first.” Going forward, the products most successful in transforming users into customers are going to be those tied to companies which build relationships, not just feature sets. Why? Because i’m voting with my wallet when i decide to become a customer, and i want to vote for companies and people that I like. I need to self-identify with their values. Know that they value me as a customer and are willing to engage me. Pandora CTO Tom retweeted my note about subscribing to P1. Sure this was marketing for him and just a small ego boost for me, but it’s emblematic of the relationship i want to have as a customer of his company.
My sense is that we’re not only going to see this in “user pays company” but also an increase in direct “user pays user” w/in content sites. Not necessarily just in micropayments, although i’m very interested in Facebook’s virtual currency experiments. Rather i foresee models evolving which support a longer tail of ongoing content creation – is it crazy to think that i might pay $2/year to a Flickr photographer who produces a lovely “photo of the day?” Personally, i’m excited about transitioning more of my media budget from established channels (cable tv, magazine subscriptions, movie tickets) and giving it directly to the companies and creators I care about rather than those who just happen to have been gatekeepers.