The Future of Rdio


            It wasn't long ago that we were all fighting over the last copy of "A Christmas Story" in aisle 3 at Blockbuster. But with the birth of Netflix, it seems like such a concept was eons ago. And while Netflix has created a positive brand for the idea of "streaming movies and TV," the music industry’s streaming services haven't been so fortunate. Rdio is looking to change that.

            Created by Skype founders Niklas Zennström and Janus Friis in 2010, the company joined already-founded services Deezer, Spotify, MOG and Rhapsody. While Spotify would later have a stranglehold on the U.S. market by early 2011, globally, Deezer was also a global contender.

            C.E.O. Anthony Bay joined the picture in early 2014. With a background at Microsoft and Amazon, he didn't shy away from telling us his goals on expanding the company. "There's [still] a huge opportunity to bring music to people," Bay explains. "If the [streaming music] audience is 1.5 billion now and 2 billion in a matter of six months, how many of those people are listening to Spotify/Deezer/Rdio? It's less than a rounding error. Most people still listen to over the air radio or pirated music. … So the question is, how do you make something that is better than stealing?"

            Rather than fight the odds against terrestrial radio, Rdio has teamed with the United States' second largest terrestrial radio company, Cumulus (second to Clear Channel), a concept the company has already been doing in Mexico for quite some time. "We believe there's value and longevity and importance in terrestrial radio," explains Bay. "Studies keep coming out that radio is still the number one place to discover new music. People have favorite stations, and listen for DJs, etc. Radio has proven the value of programming.

“If touring revenue is where [most your income comes from], recorded music is important but it becomes a way to touch more people to make them care about you and come to your show.”

            But where radio lacks, Rdio is looking to fill the void. "Radio is a great way in which people can discover music but you can't go deep,” Bay continues. “So the marriage of listening to a song, then hearing 'listen more on Rdio' is a very important thing when said by the talent [bands], the jocks [DJs] and our advertisements. We're looking to be that bridge for advertisers, artists and listeners to link the best of both [worlds]."

            But what about artists? With such little return on streams, why should artists sign up for any of the streaming services, let alone Rdio? "That would be like saying, ‘Do I want my record in stores?’” says Bay. “I'm from the philosophy that distribution is generally good. … If you look at the business, if you think about it holistically, what's your total revenue as an artist? What do you get from publishing? It tends to grow over time. Higher demand, the more people listen to you, the more people like you, the more people who cover you, the more money you make. Then you have recorded music, which [on average, is around 7% of artists profits today].

            “The majority is touring, merch, etc.,” he continues. “So if touring revenue is where [most your income comes from], recorded music is important but it becomes a way to touch more people to make them care about you and come to your show.”

            According to Bay, Rdio gives you the opportunity to create a profile, allow others to follow you, create unique playlists, share on Facebook/Twitter and more, making it a one-stop shop to spread the word on your music. As he puts it, artists should look at the company as an opportunity for distribution.

            Last year the company shut down their sister company Vdio, a movie service similar to Netflix. And while it didn't succeed, it showed the company's constant willingness to adapt to current markets. Being in the Bay Area, Rdio is able to ring doorbells to partner with several other phone applications. The recent deal with Shazam is an example of just that. "If you use Shazam, you can link your account to Rdio so that everything you shazam will be tagged into an Rdio playlist" touts Bay.

            Rdio is currently $9.99 a month for unlimited streaming + mobile, but offers an online only; student discounted unlimited; and a free “radio” version as well.

By Andy Mesecher

Contact Rogers & Cowan, Page Jeter, [email protected]