Rdio’s Silence Ends As Skype Founders Launch Music Subscription Service

Music subscription services still haven’t proven themselves in the marketplace, yet new ones keep appearing — the latest being Rdio. Quiet since its existence was first revealed last October, the company co-founded and funded by serial entrepreneurs Niklas Zennstrom and Janus Friis — who previously gave the world Skype, Kazaa and Joost — has now entered invitation-only beta in the U.S. I’ve been using it for about a week.

Like several others in the marketplace, Rdio -– pronounced “AR-dee-oh” -– promises streaming, cloud-based access to a library of millions of songs for a flat monthly fee. (To learn more about cloud-based streaming, attend Structure, June 23 & 24 in San Francisco) Desktop and mobile access via iPhones (s AAPL) and BlackBerrys (s RIMM) costs $10 monthly, while desktop-only customers pay $5. That’s an increasingly familiar price point: MOG, which went live last fall and is now preparing its mobile launch, will have the same two-tiered price system, while Rhapsody and Thumbplay both offer desktop-plus-mobile plans for $10; European fave Spotify offers free ad-supported streams and a two-tiered premium plan. (See my report, Spotify Leads the Streaming Music Scene, on GigaOM Pro, sub req’d)

So what’s new? Rdio favors social music discovery via a Twitter-like model based on following other users. Music that’s frequently played among those users turns up in a “heavy rotation” list, a sort of musical version of Twitter’s trending topics. It’s an inherently non-private service, with your listening history as well as your collection of bookmarked songs on display for anyone to scrutinize. That may be a turnoff for some people, but it’s the key to Rdio’s discovery component.

I liked Rdio’s fast-moving, browser-based interface; there’s also a small desktop app that performs seamless playback and inspects your iTunes library in order to populate your web collection. I found the mobile app a little balky, but it survived a road trip test, notably in that since it includes offline caching of songs, I was able to access my favorites while in places where connectivity was sparse. As for the “lean-back” radio element, it’s fairly basic and not terribly flexible, using Allmusic Guide data to construct stations based on a single artist – not trait-based like Pandora or culturally driven like Last.fm, and without the clever slider functionality of MOG.

I’ve already written about some of my frustrations with cloud-based music services, and Rdio doesn’t solve all of my issues concerning interoperability and user experience. While its catalog of almost 5 million songs is growing, it’s still a little spotty –- all four majors are on board, but some but not all major indies are represented. Like its rivals, I see Rdio as a secondary service where I might discover and sample music on-demand, rather than something that can replace ownership of things I like.

Rdio does capably fill the gap between what I own and what I might want to hear but would never pay for — trouble is, not many people have demonstrated a willingness to pay for other cloud music services that do the same thing. (I do believe that paid access models are replacing ownership of music, partly but not completely, and very slowly.) Rdio smartly integrates the better elements of free services –- social connections, discovery, playlisting, radio -– with the paid all-you-can-eat model, bringing everything together into one place in the hopes that people will pony up. It’s a good product that its creators say will become more feature-rich, which is important as Spotify becomes more social and others trick out their services. But while Rdio may be satisfying for a niche of musically curious people, I’m not yet seeing why it would pull away from the pack to become a breakaway hit.

Related GigaOM Pro Content (sub req’d):