Pandora acquires Rdio for $75M in cash

Pandora has agreed to acquire key assets from Rdio, a streaming music service that competes with Spotify and similar products, for roughly $75 million in cash.
That’s more than $50 million less than Rdio raised across six rounds of venture financing, according to Crunchbase. Pandora said in a press release that the final figure might change because it’s subject to “certain purchase price adjustments.”
Pandora will acquire Rdio’s technology and talent but not the operating business — which means the Internet radio company won’t be delving into the on-demand streaming business the moment it acquires the portions of Rdio that interest it.
Instead, the company said it plans to “offer an expanded listening experience by late 2016” depending on its ability to “obtain proper licenses.” Pandora, in other words, will give itself some time to assimilate Rdio before it takes on Spotify. (Rdio said it’s service won’t be affected today, but will offer updates on the status in the near future.)
On an investors call following the announcement, Pandora CEO Brian McAndrews said the company opted to purchase Rdio’s assets rather than building it from scratch because Pandora had already determined that it’s strategy was to eventually offer an on-demand component. As such, buying the assets allow Pandora to move quicker, he added.
The deal is a further sign of consolidation in the music streaming market. Apple spent $3 billion on Beats last year, and is shutting down the Beats Music service at the end of the month. Grooveshark, another streaming service, closed in April.
Yet the streaming music market will remain crowded despite that consolidation. Spotify, Apple Music, Amazon Prime Music, Google Play Music, Deezer, Tidal, and other services will continue to vie for attention in this oversaturated space.
This is the second major acquisition for Pandora in the last few months, with the first being a $450 million purchase of ticketing business Ticketfly. Between Ticketfly and the presumably soon-to-launch on-demand component of Pandora, hopefully it’ll be enough to keep it competitive with the slew of rivals.
Investors, however, don’t seem to be very impressed by the development, as Pandora’s stock is essentially flat slightly in after hours trading.

Apple reportedly wants to get rid of free on-demand music

Love free stuff? Then you won’t like Apple’s new music subscription service, which the company is expected to launch later this year. Apple is planning to launch the service without a free tier, and instead plans to charge every user after a limited free trial, according to a Recode report.

That’s similar to Beats Music, which Apple got its hands on as part of the $3 billion Beats acquisition last year. But it’s very different from Spotify, the current industry leader. Spotify has 15 million paying users worldwide, and at least 45 million additional users tune into the service’s free, ad-supported tier.

Spotify’s ad-supported tier has been so successful that competing services have started to embrace free music as well. Rdio, for example, long resisted giving music away for free, but the company now has a free radio service that aims to pull in users, with the goal of eventually converting them into paying subscribers.

However, Recode reports that label executives are increasingly growing frustrated with those free tiers, with some blaming them for the decline in music downloads. Apple wants to counter that trend with a $8 service, which is expected to be closely tied into iTunes and iOS.

Some in the industry would also question that notion, and instead argue that there are simply different price points for different types of users. Rhapsody has been trying to win over budget-conscious users with a $5 radio tier that is essentially like a Pandora without ands, and Deezer has started to charge audiophiles as much as $15 per month for lossless FLAC streams.

Deezer North America CEO Tyler Goldman told me at CES this year that he doesn’t believe in just one package and price for every type of user. Tyler Goldman “That silver bullet strategy doesn’t work,” he said.

Rdio launches in 24 additional countries

Music subscription service Rdio launched in another 24 countries Thursday. The list of new markets for Rdio includes the Cayman Islands, Haiti and Jamaica, and brings Rdio’s global footprint to 85 countries and territories. Rdio also announced a partnership with Caribbean mobile operator Digicel that will allow Digicel customers to stream Rdio for free for 30 minutes a day without counting against their data caps. As a comparison, Spotify is now available in 58 markets worldwide.

Rdio partners with Shaw to grow subscriber base in Canada

Streaming music service Rdio has teamed up with Canadian broadband provider Shaw to grow its subscriber base in the country, both companies announced Thursday. The partnership includes a strategic investment by Shaw as well as yet-unannounced “marketing, content and promotional” initiatives. Rdio recently struck a similar agreement with a big media group in Brazil, and teamed up with terrestrial radio network Cumulus in the U.S. last summer. Thursday’s release comes with the interesting tidbit that Canada is Rdio’s second-biggest market, with Brazil ranking third, and the company is apparently getting some traction in Australia and Mexico as well.

Rdio buys music subscription service Dhingana to enter India

Spotify competitor Rdio has acquired the Indian music subscription service Dhingana, according to local media reports that have since been confirmed by Dhingana executives. The acquisition could be a way for Rdio to quickly get access to a huge market, but it comes after Dhingana had to shut down because it wasn’t able to secure licenses from one of the country’s biggest record labels. Rdio said in a release posted on Dhingana’s website that it wants to launch in India later this year.