Rdio Rolls Out A Free Music Model

Freemium Model Offered Today

In order to compete with webcasters in the streaming music market, RDIO, which currently charges for online subscriptions, is now offering free music -- with advertising to support the offering.

THE NEW YORK TIMES reports, "RDIO, which is based in SAN FRANCISCO and offers its music service in 60 countries, has been admired by technology and music insiders for its clean design, but it has long played second fiddle to SPOTIFY and RHAPSODY. Its change to a so-called freemium model -- which lures users with free songs and then tries to sell them more extensive features by subscription -- will help it compete against those services and others like BEATS MUSIC and GOOGLE’s PLAY MUSIC ALL ACCESS."

“What we’ve learned collectively over the last few years,” RDIO CEO ANTHONY BAY told THE TIMES, “is that the most successful models are freemium models.”

CUMULUS MEDIA owns a 15% interest in RDIO. CEO LEW DICKEY JR. talked up RDIO in an interview recently, saying "RDIO isn't a revenue generator yet. We will be selling all of the ads from RDIO. That will be new media at that point. That's the way to think about this. We've got a business that's growing, we've got a business that's generating an enormous amount of cash, and we're positioning this business for the long run... It's very, very early. We're just getting started with these guys and they have a new CEO, ANTHONY BAY. And so, ANTHONY's been running around the globe, getting everything set in the various countries where they're operating. This is really the setup year for RDIO in 2014. I would look for real progress to be made in terms of users and the beginning of monetization. In our mind, the next 18 months are all about building usage."

THE TIMES notes, "RDIO’s new design, which fills a user’s screen with readymade playlists based on their tastes, draws heavily on the Internet radio format, which was popularized by PANDORA and has become an increasingly important as digital outlets try to figure out how people prefer to listen to music online. The radio giant CLEAR CHANNEL has made an aggressive push for its online radio platform, iHEARTRADIO. Recently RHAPSODY introduced UNRADIO, a music service that is free for T-MOBILE customers, and GOOGLE bought SONGZA, an online playlist service. The growing competition for streaming music also involves APPLE, which introduced its PANDORA-like iTUNES RADIO service last year, and in MAY agreed to pay $3 billion for BEATS ELECTRONICS, the company behind BEATS headphones and the BEATS MUSIC subscription service. YOUTUBE, a division of GOOGLE, is also developing a paid music service that is expected to be introduced this FALL."

“This is the most exciting Internet radio product we’ve seen and provides a compelling complement to our nationwide broadcast radio platform,” said LEW DICKEY.

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