When Pandora launched its music service in late summer 2005, it came with a straightforward pitch: ten free hours of music a month before users had to subscribe. “We didn’t have much money in the bank,” recalls former CEO Joe Kennedy. The paywall was meant to keep costs in check while laying the groundwork for a subscription business.

Except, people didn’t want to pay. The free trial drew huge interest, while conversions to paid were abysmal. Even worse, the most devoted fans found ways to bypass restrictions. “People were getting to the end of their trial, and hacking around [to keep] listening,” says an early employee who spoke to Fast Company on the condition of anonymity. “It was very clear that we were onto something.”

Within months, Pandora pivoted to a free, ad-supported model, an

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