Ondrej Holzman More than five months ago Rdio ironically welcomed Apple in the world of music streaming, where the Californian giant entered with considerable delay. Today, however, Rdio unexpectedly declared bankruptcy because it could not establish itself sufficiently and find a working economic model. Several of Rdia's key assets are being bought by another streaming service, Pandora, for $75 million.
Pandora is not as well-known a brand for domestic users as, for example, Rdio or its competitor Spotify, but in the United States it belongs to the giants in the field of music streaming. However, it does not work as an on-demand streaming service like Apple Music or those mentioned above, but as an online radio station that adapts to the listener's taste.
The new connection with Rdio makes sense for both parties. However, this is not the purchase of the entire company, which will declare bankruptcy as part of the acquisition, which has two main reasons. Pandora will acquire technology and intellectual property for $75 million, and many employees should also transfer, but the on-demand streaming service in its current form, for example, will be buried.
Rdio's record label licensing deals are not transferable, so Pandora would have to negotiate its own. At the same time, financial difficulties weighed on Rdio, and for Pandora the acquisition of the entire company would be a burden. That's why Rdio declares bankruptcy.
However, Pandora is going to build its own platform and an on-demand streaming service should not be missing, it will only happen in a year at the earliest. Pandora boss Brian McAndrews revealed that his company's plan was to offer radio, on-demand and live music under one roof, which Rdio will now help to achieve. Pandora's existing business – personalized radios – is said to be the first step.
Rdio chose Pandora because it said it offered the best product in the streaming market, and negotiations had been going on for several months. Apparently, the recent bad financial results also forced Pandora to make a significant acquisition, when the company's representatives admitted that the launch of Apple Music could also be behind the worse earnings.
Rdio, until now a direct competitor of Apple Music, will completely close its services in more than 100 markets where it operates. While it usually garnered praise for its service, it failed to attract enough users in a competitive market to be economically viable. Nevertheless, Pandora wants to use the obtained funds, among other things, for a wider expansion, as until now it was only available in Australia and New Zealand in addition to the United States.
At the moment, Apple Music, Spotify and others will no longer have direct competition in the field of on-demand streaming, as Pandora does not yet offer the option of listening to entire albums or specific songs or compiling playlists. It only creates personalized stations within which the user has limited track skipping. In this format, Pandora did not have to sign contracts with individual music publishers thanks to interactive radio licenses.
However, it can be expected that it will have to enter into these negotiations (for example, it has already agreed with the music arm of Sony) in order to be able to present its own streaming platform next year, where it will offer the user a complete experience. Depending on how negotiations go, Pandora would like to launch new products in late 2016.
As part of the acquisition, Pandora is also getting the Rdio trademark, but it is said that it does not plan to use it for now, so it will disappear from the market.
This hit me hard. I tested most of the ones that are worth something and Rdio suited me the best and I have been paying for a family subscription for more than a year. Rdio was nicely focused on albums and not playlists, everything was so old-school combed and simple, you could almost say Apple country. Now I'm going to migrate to Spotify and see, Apple Music didn't convince me at all during the Trial. Whoa…