Pandora is an online music streaming service that uses a music genome algorithm to classify songs and create personalized radio stations for users. It launched in 2005 and pioneered a freemium business model, offering 10 hours of free listening per month. This risky approach worked well, as Pandora grew its user base and saw a 650% increase in profits from paying customers. However, other companies like Ning that tried freemium saw mixed results, and Ning ultimately abandoned the model in favor of premium services and advertising revenues. While freemium can drive growth, companies must balance user retention and managing abuse to remain profitable long-term.