# Rdio (2010 – 2015)

- URL: https://girisimcikafasi.com/en/startup-graveyard/rdio/
- Sector: Media and entertainment
- Country: United States
- Total funding: unknown
- Cause of closure: Lost to competitors

## What did it do?

Rdio was a music streaming service offering the catalogues of the four major record labels and many independent distributors. Its ad-supported free listening and ad-free subscription options were available in 85 countries. Users could share songs, albums and playlists both within Rdio and on networks such as Facebook and Twitter.

## Why did it shut down?

Rdio was competing in a market where rivals such as Spotify had pulled ahead; in 2014 Pando questioned whether the company stood a chance in that race. The company tried to grow through a free listening tier, the video service Vdio and new markets such as India. But these moves did not create sustainable scale. On 16 November 2015 it filed for Chapter 11 bankruptcy and agreed to sell some of its assets and intellectual property to Pandora for $75 million in cash. The service shut down on 22 December 2015.

## The story

On 3 August 2010 Skype's founders, Niklas Zennström and Janus Friis, came on stage with a new idea: a music streaming service with strong social features. Rdio brought together in a single app the catalogues of the four major record labels as well as the Merlin network and distributors such as CD Baby and The Orchard. Users could share what they were listening to with friends both within Rdio and on Facebook and Twitter.

Over the next five years Rdio moved fast. In 2011 it released an open API for developers and launched in Brazil as Oi Rdio. In April 2013 it opened Vdio for watching films and series; existing subscribers were given $25 of credit for the service. In 2014 it added unlimited free listening alongside subscriptions, and acquired Dhingana, a music service in India, and TastemakerX, a social music discovery service. In September 2013 it signed a deal with radio company Cumulus; the Roku 3 remote had a dedicated Rdio button. Over time the service became available in 85 countries.

But the market was increasingly consolidating around a few big players. In a 2014 piece assessing the TastemakerX acquisition, Pando asked whether Rdio stood a chance against Spotify and the rest. The free tier, the video experiment and new countries could not lift the company to its rivals' scale; Vdio's beta was also wound up.

On 16 November 2015 Rdio filed for bankruptcy under Chapter 11 and announced it had agreed to sell some of its assets and intellectual property to Pandora for $75 million in cash. The deal was subject to bankruptcy court approval. Some employees moved to Pandora, which planned to use the assets to offer an expanded listening experience. Rdio stopped streaming music on 22 December 2015.

Rdio was a product loved for its design and social features. But in a market where everyone licensed from the same record labels, a good interface did not create a lasting competitive advantage. Having split its resources between video, new countries and free listening, the company ended up handing its technology to a bigger rival.

## Lessons

- If you offer the same licensed content as your rivals, good design alone is not enough to attract users; look for differentiation in content, distribution or price.
- In a business with high licensing costs, launching a video service, new countries and a free tier all at once scatters your focus; become profitable in one market first.
- Build relationships with potential strategic buyers before hard times arrive; there is no bargaining power left at the bankruptcy table.

## Sources

- [Rdio](https://en.wikipedia.org/wiki/Rdio)
- [Pandora To Buy Rdio Assets For $75M In Cash, Rdio Files Ch.11 And Shuts Down Service](https://techcrunch.com/2015/11/16/confirmed-pandora-buys-key-rdio-assets-for-75m-in-cash-rdio-files-ch-11-to-shut-down/)
- [Rdio will shut down for good in one week](https://www.engadget.com/2015/12/15/rdio-shutdown-december-22/)