On Monday, Pandora announced its acquisition of Rdio, a music-streaming subscription service for $75 million in cash. The Pandora acquires the assets of Radio and not the whole company. Pandora plans to use Rdio’s properties to launch a widen listening experience in late 2016.
Founded in 2010, Rdio is a pioneer in the on-demand music streaming market competing against Spotify and Apple Music. It is known for offering ad-supported free streaming and ad-free subscription streaming services in 85 countries. It is available in web and app for iPhone, iPod, Touch, Android, Blackberry phone. It’s library holds content of four major record labels, and the Merlin Network and the aggregators The Orchard, INgrooves, CD Baby, BFM Digital, Finetunes and Catapult. Apart from live streaming, it also has social networking features like being able to share songs, albums and playlists with others. Due to bankrupcy, the company decided to open out for sale.
The acquisition deal covers Rdio’s technology and intellectual property and Pandora also promises to offer jobs for many of them from the Pandora’s team. There are two reason why Pandora is not buying the whole Rdio – one, Rdio’s licensing deals are not transferable so Pandora would have to make its own deals with the record labels no matter what. Secondly, Rdio is already financially unstable so acquiring the whole company may drain Pandora’s resources. Buying just the assets allow the company to move ahead quicker and it fits better into the company’s strategy. Thereby, Pandora plans to create its own platform with the inclusion of many other features that adjusts to the tastes of the listener.
The acquisition is quite significant in the live streaming music sector. The users of Rdio may have to say goodbye to their favorite on-demand subscription service. For Pandora, this help the company to position itself more directly against Spotify, Apple Music, Deezer and Tidal. Pandora and Spotify may been used synonymous with the streaming of music, however, Pandora has been specialized in personalized, artist and song-based radio stations and Spotify for the on-demand music subscription with a massive catalogue. Unlike few years back, Rdio was a biggest competition for Spotify. Now with the assets acquisition, Pandora will take the spot for Rdio.
This acquisition of Spotify’s assets is the second major acquisition for Pandora in the last few months, with the first one being $450 million purchase of ticketing business Ticketfly. With the Ticketfly and Rdio’s assets, Pandora hopes to keep it competitive in the oversaturated space with rivals(Spotify, Apple Music, Amazon Prime Music, Google Play Music, Deezer, Tidal and other services.