Rdio: Music Start-Up From Skype Founders

Skype founders Janus Friis and Niklas Zennström recently created Rdio (pronounced ar-dee-oh) - an unlimited, on-demand social music service in US and Canada. The service is very similar to Spotify, though there is no way to use it for free (apart from a short trial period). Rdio offers a vast music library (> 7 million songs) from all major labels (EMI Music, Sony Music Entertainment, Universal Music Group and Warner Music Group) as well as top indie labels and distributors. It's got social features akin to Twitter: users can see what is currently popular among other users and create and listen to collaborative playlists. The company promises to 'take the work out of deciding what to play next'. All that for $9.99 a month for unlimited web and mobile access (including the offline mode) and $4.99 a month for Web-only access. Rings a bell?

Rdio also announced its cooperation with the award-winning multi-room music system - Sonos. The system offers gadgets that wirelessly connect with each other and go online to play music from anywhere: your personal library, radio stations and other music services like Rdio. With an average price of $500 per gadget (you'd need one for each room), it's a luxury not for an average Joe. Though having music in every room of the house, controlling it all from your phone, computer or a special controller probably feels nice. Besides, as soon as Rdio works on Sonos their users will be able to access any music they want and play it in any (or all) rooms in the house.

While Rdio is targeted for American and Canadian markets only, it's quite significant for Scandinavia and Baltics that the start-up's founders come from Sweden and Estonia. It's not every day that someone from that area ventures into US market with such an ambitious service. Rdio received funding from Atomico, a technology investment group that was also created by Niklas Zennström and Janus Friis back in 2006. Perhaps it's the founder's extensive experience and large nextwork of contacts that helped them gain enough clout to enter the North American market.

Though Rdio is not exactly Spotify (it's missing the essential component of being free), the two services have enough in common to be compared with each other. Arguably, the reason Rdio is lacking a free option is because it wanted to make money from day one and it did not want to annoy users with interruptive ads. Though Jonothon from Spotify is part of the service's virality and charm. Spotify has been trying to launch their services in US for the past few years. With Rdio being the first in that market, Spotify's mission might become a tad more difficult. However, unlike Rdio Spotify has a brand that many people recognize and allegedly it already has thousands of US users.

Rdio has not completely launched their service yet - you can access it only through invites at the moment. What remains to be seen is how American music-lovers react to Rdio. Perhaps they would embrace it and happily pay the montly subscriptions. Perhaps they'd stick with free online streaming from other providers like Spotify (one day). Whatever the outcome, it would be an exciting race to watch.

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mikikuusi January 06, 2011

This might partly explain why it's been practically impossible for Spotify to get deals with the record companies in the US. But great to hear that Niklas & Janus are still at it as entrepreneurs, in addition to playing the VC game!