Pandora To Acquire Key Assets From Rdio

News that Pandora is acquiring the technology and intellectual property assets from Rdio for US$75-million must have raised the Shaw Media family's collective blood pressure on Monday. The Calgary-based telco made a sizeable investment in Rdio in April 2014 and now presumably has little to show for it other than an earnings write-down.

Rdio will file for bankruptcy to rid itself of accumulated debt and shut down its existing service in all markets that include Canada, where it has been available in a cable bundle offered to Shaw subscribers. Rdio CEO Anthony Bay won’t be joining Pandora, which will extend job offers to many members of Rdio’s team.

Pandora CEO Brian McAndrews said during an investor call following the announcement Monday that the company’s goal was to eventually offer “radio, on-demand and live music” all under one roof. He went on to describe Pandora’s existing personalized radio business as “step one” for the company.

“We seek to be the definitive source for music discovery and enjoyment globally,” he said, adding that Pandora would offer “full on-demand paid subscription” over time. “We plan to substantially broaden our subscription business.”

What if anything Shaw gets out of the Pandora deal is unclear, but licensing rights are not part of the asset sale and that means Pandora is back to square one if it wants to enter the Canadian marketplace. So far the American internet broadcaster has shown a disinclination to do so.

Attempts to reach Rdio executives by text and e-mail Monday evening went unheeded. Shaw, meantime, appears to have discontinued offering Rdio as a cable or Internet service on its website.

Rdio was partially owned by Cumulus and Shaw, whose respective sales forces were intended to fuel Rdio’s advertising revenue model.

Rdio launched its mobile streaming in Canada in late 2010 with a free six-month trial offer. Until the launch of Spotify six months ago, it was perceived as a dominant player in the niche online market here. According to Audience Insights' analyst Jeff Vidler, Rdio's profile in the market had shrunk and was in fact last in the pack.

Vidler's most recent survey of Canadians 18+ acknowledging having listened to a music streaming service in the past week placed Spotify at the top with an 8-percent reach. Songza comes in 2nd with 4-percent, Apple Music is tied with CBC Music at 3-percent, and Rdio with 2-percent.

For context, Vidler says  81-percent of Canadian adults say they listen to broadcast radio weekly; 41-percent say they access music on YouTube at least once a week and 27-percent say they listen weekly to a pureplay streaming music service.

“The thinning of the herd has begun," he says, adding that "we can expect more consolidation among streaming music services as the winners are separated from the losers. Rdio simply didn’t have the scale to compete with the big boys: Pandora, Apple, and Spotify. And this is a tough business—with airtight margins. You need to show serious growth to survive.”

 

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