Once a subscriber had signed up for the free month of service, the objective was to get the
subscriber to convert from free- to paid-status and then to retain that subscriber for as long as
possible. In order to study the effect of the subscription fee on conversion and retention rates,
management had tested a variety of different price points. Based on analyses of data from these
market tests, McCarthy believed that his company’s ability to retain subscribers was comparable to
that of successful subscription cable services. McCarthy estimated that approximately 70% of new
subscribers converted to paid-status and that 40% of subscribers that converted to paid-status
continued to subscribe after six months. McCarthy expected retention rates for subscribers that
subscribed more than six months to be quite high.