Market Insight

Rdio launches mobile radio service

October 14, 2013

Abel Nevarez Abel Nevarez Research Analyst II, Mobile and Telecoms

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US-based digital music service provider Rdio has launched a free radio service for iOS and Android users in the US, Canada, and Australia. Currently ad-free, the new service allows users to access select playlists from Rdio's catalog of 20 million song titles even after their 14 day free trail expires. Rdio previously required non-subscribers to sign up for a subscription after their trial period expired to continue accessing music.  

The free radio offer expands Rdio's paid on-demand subscription service which starts at $9.99 per month. Rdio plans to implement ads in the future to support its free service.

Rdio's overdue addition of free streaming mirrors similar services already offered by competitors Pandora, Spotify, and Apple.

The move follows Spotify's style of customer acquisition and is an attempt to stay relevant when (in the US market) radio has become a widespread feature.

However, this move into radio brings Rdio into an already crowded market, in which it must compete for attention with companies that are not its traditional competitors and using radio services to pursue different goals.

The move however fails to differentiate Rdio from larger competing music services. Spotify, with 6 million paying customers, already offers free mobile radio streaming in the US to help drive its paying subscriber base, in addition to on-demand music selection and offline music storage for the same $9.99 a month price point.

 Services like Apple's iTunes Radio, offered to boost Apple's device sales, and operators such as Cricket's Muve Music, used to drive mobile subscriptions, are finding alternate ways to monetize their users and differentiate their services.

Overall revenue margins for digital music services remain tight as the result of costly royalty fees for both streaming and on-demand music services. Pandora, with its 71.2 million active users, recently reported deepening losses for the first half of 2013 year-over-year despite its still growing user base and greater consumption. IHS expects total US digital music revenues of $3.9bn in 2013.

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