The conventional wisdom of digital business models states that it’s a bad idea to start asking people to pay for something they’re used to getting for free.

Yet, that’s exactly what Pandora did in February when it capped the amount of free streaming each listener gets a month on mobile devices to 40 hours. Those who wanted to keep the music going were asked to pay 99 cents to continue on an unlimited basis for the rest of the month, or $3.99 a month for unlimited ad-free listening.

Instead of triggering a mass riot among Pandora’s 70.1 million active listeners the way Netflix did last year with its price hikes, two things happened: listener hours dropped 12% in April and, in the same month, the app hit the No. 1 top grossing app on iOS outside of games, according to a report released Thursday by AppAnnie, a San Francisco-based firm that tracks apps across multiple platforms.

Read the full story: Billboard

Pandora Paywall Pays Off, Research Shows

Live Music Industry Awards May 30, 2013 @ 10:12AM