The selection of streaming music services has now also reached more well-known players in the industry. The company Rdio, which has been active since 2010, filed for bankruptcy and a large part of the company is picked up by the Internet radio operator Pandora for 75 million dollars.
In a blog entry, Rdio stated that the service would continue for the time being, but further information about the future was announced for the next few weeks. The insolvency judge still has to approve the deal.
Pandora is buying technology and design solutions from Rdio, they said. Some of the employees will also be taken over. The Pandora service will thus be expanded in the coming year. The company’s plans for international expansion had recently been reported. Pandora is currently only available in the USA.
Rdio was launched by Janus Friis, a co-founder of the Skype Internet telephony service, among others. The business model is similar to that of streaming market leader Spotify: a free version with limited functionality and a subscription offer for around ten dollars or euros a month.
Music streaming is on the advance worldwide and is gradually replacing CD purchases and music downloads. But it is also a business in which high user numbers are crucial. The cost of running the business hardly depends on its size – but more than two thirds of the revenue goes directly to the music companies. That’s why providers need as many subscription customers as possible. In Germany, the Simfy service had run out of steam this year, and customers were taken over by the French competitor Deezer.
The Wall Street Journal reported that Rdio had 98,000 paying customers in the USA at the end of last year. According to the latest figures, Spotify has 75 million users worldwide, of whom 20 million pay for a subscription.
Pandora recently lost more than a third of its stock market value in one fell swoop, partly because the number of users dropped from 79.4 to 78.1 million. Investors suspected that this was a consequence of Apple’s entry into the business. So far, Pandora mainly operates radio stations on the Internet, but could also expand its streaming business with Rdio.
For Rdio investors, it is a bitter outcome: according to media reports, they pumped 125 million dollars into the company over the years, partly to a valuation of half a billion dollars. According to the insolvency petition filed late Monday, Rdio owes money to music companies such as Universal Music or Warner Music, but also to Facebook and Dell.