Music Service Rdio Will Launch Free Version to Compete With Spotify
Rdio, a music streaming service that lets members listen to songs online, organize them into playlists and share them with friends, will debut a free, ad-supported version before the end of the year, according to The New York Times and other published reports.
Rdio currently offers only a paid subscription model, charging users between $5 and $10 a month to use its service. This puts it at a disadvantage to one of its biggest rivals, Spotify, which offers a free version of its music service with advertisements in addition to a premium version for $9.99 a month.
Rdio will launch its ad-free version as part of a deal with radio station operator Cumulus Media. Under the terms of the deal, Rdio will reportedly gain access to programming at the 525 terrestrial stations owned by Cumulus. Cumulus will also tap its large sales staff to sell ads for Rdio's free version.
No money will change hands in the deal, but Cumulus is said to be taking a large equity stake in Rdio's parent company, Pulser Media. The chief executive of Cumulus told the Times that he sees the partnership as Cumulus's "digital play." Cumulus intends to draw on its programming to create playlists and other content for Rdio users.
Meanwhile, Rdio, which was founded in 2010, will become more competitive against rivals such as Spotify and Pandora. "The biggest challenge we face is really awareness," Drew Larner, Rdio's CEO, told the Times. "To the wider world, streaming is still relatively nascent."
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Brian Patrick Eha is a freelance journalist and former assistant editor at Entrepreneur.com. He is writing a book about the global phenomenon of Bitcoin for Portfolio, an imprint of Penguin Random House. It will be published in 2015.