Rdio, the struggling music streaming service which directly competes with Spotify, will be shuttering in the coming weeks—following an announcement today that Pandora will be buying Rdio’s technology & offering employment positions to some of the company’s talent.
While Pandora’s business model has relied solely on offering users ad-free radio at a $4.99/month fee (or free streaming radio with limited skipping & commercials), Rdio offers $10/month subscriptions—similar to Spotify—where users can customize playlists and listen to any song they wish on-demand.
Rdio—with some 78 million users, mostly in the US—has had difficulty in competing with the likes of Spotify & newcomer Apple Music, despite the company’s accomplished founders (including Skype & Kazaa’s Janus Friis, Niklas Zennstrom, and Carter Adamson) and 15% ownership stake made by Cumulus Broadcasting back in 2013.
As new parent company Pandora itself can attest, music streaming has slim profit margins, which have led to Rdio approaching bankruptcy (a pre-requisite for the Pandora sale to go through), and Pandora losing 1/3 of its value after posting a Q3 loss of near $86 million. Apple Music, which just launched this past Summer, already claims to have nearly 7 million paid subscribers; while Pandora’s pay service, Pandora One, has acquired only 4 million since launch.
Despite recent losses, Pandora has been making strides working with record labels to develop “fair” licensing agreements, including one made with Sony/ATV earlier this month, and recently acquired live events platform TicketFly to bolster its product offering. Pandora also announced earlier this month that the second season of the popular podcast Serial will debut on the platform simultaneously with the podcast release.
There is no immediate word from the folks at Rdio what will happen to existing subscribers’ memberships once the service sunsets.