Streaming music service Rdio is planning to shut down and sell "key assets" to Pandora.
Pandora announced the pending acquisition today, saying it will spend $75 million to buy "technology and intellectual property from Rdio" and hire "many members of Rdio's team." Pandora is not buying the full company. But using Rdio technology and staff, the buyer "expects to offer an expanded Pandora listening experience by late 2016, pending its ability to obtain proper licenses."
Pandora and Rdio have different business models. Pandora lets customers create radio stations tuned to their tastes, but without allowing them to play any song they choose at any time. The basic service is free, but paying users get an ad-free experience and the ability to skip a greater number of songs.
Rdio offers stations for free, with ads, while charging for on-demand plans that disable ads and let customers keep music libraries of specific songs. The different business models require different licensing agreements with music labels. Pandora's statement that it will change its product "pending its ability to obtain proper licenses" could indicate that it will start offering a more Rdio-like service.
Rdio has long been behind rival Spotify in adoption, and its challenge became even harder as giant companies like Amazon, Apple, Google, and Microsoft began offering similar services.
Rdio itself will stop existing as a separate brand after the transaction with Pandora is completed.
"The transaction is contingent upon Rdio seeking protection in the United States Bankruptcy Court for the Northern District of California," the announcement said. "Upon approval of the proposed transaction by the bankruptcy court, Rdio will be winding down the Rdio-branded service in all markets."
The Bankruptcy Court is expected to supervise an auction for Rdio's assets.
In a statement, Rdio said it is "proud to have created an innovative and critically acclaimed global music streaming service." Rdio attributed the sale to "the state of the streaming marketplace," and said that Pandora "shares our passion for delivering the best possible music experience to music fans everywhere."
"The addition of technology, product, IP and people from Rdio will unlock opportunities for Pandora—including speed to market for their on-demand services, global expansion and direct licensing relationships. The result will be the industry’s best combination of streaming radio and subscription songs on demand," Rdio said.
Although Rdio's intention is to sell to Pandora, the company said that by law it "is required to entertain competitive offers during the bankruptcy process."
reader comments
38