Seeking to gain ground in the war over streaming music, Rdio plans to introduce a low-cost mobile subscription plan offering limited downloads from its library of songs.
The San Francisco-based music service, which is scrambling to compete with the likes of Spotify and a forthcoming service being developed by Apple, told BuzzFeed News that it will offer a significantly limited subscription plan for $3.99 a month. It hopes the price will lure listeners who don't want to pay the industry standard $9.99 a month for unlimited access to millions of songs.
That $3.99 will buy you only so much. Rdio says the service, called Rdio Select, will include two components: 1) Pandora-like streaming radio stations, without ads, and with the ability to skip ahead as often as you want, and 2) daily access to 25 songs of your choosing. Subscribers will be able to download the 25 songs and replace some or all (or none) of them each day, so long as the number doesn't exceed 25.
Anthony Bay, Rdio's CEO, told BuzzFeed News that 25 songs "is more than most users download in a day, so we feel it's enough." He added that the limited number "allows us to license the product in a way that we can keep the price at $4 a month" without losing money.
He said Rdio Select would be a mid-level option in a market that lacks.
"We've all been flying airplanes that had business class only," Bay said. "There is no coach."
The new service is an aggressive attempt to capture market share at a time when competition in streaming media is heating up quickly.
Spotify, the leader in streaming music, is widely rumored to be planning a video service. Apple, which dominates the audio download market through iTunes, and which last year acquired the streaming audio service Beats Music, has been in talks with record labels over its own music streaming product.
And the rapper Jay Z recently announced plans for yet another music service, Tidal, which he hopes will attract listeners with exclusive content and celebrity pulling power.
Rdio is not operating from a position of strength. Though the company does not disclose information about user numbers, its share of the market is believed to be significantly smaller than Spotify's. One widely followed analyst, Bob Lefsetz, told BuzzFeed News that he didn't see the Rdio Select service as a serious threat to rivals.
One thing Spotify offers that Rdio doesn't, Lefsetz noted, is a free version of on-demand music listening, supported by ads. (This free tier was reportedly what caused Taylor Swift last year to remove her music from Spotify in protest, creating a public relations headache for the company.) Lefsetz was skeptical that Rdio would be able to attract many new users with the $3.99 price.
"The issue is not what the price is," he said. "The issue is getting people to pay at all."
Rdio, for its part, is betting that there is "quite a large audience of people who aren't ready to spend $10, but are ready to spend $3.99," according to Bay.
Taking a dig at Spotify, Bay said Rdio had no plans to add a free version of on-demand listening. Rdio's only free product is a streaming radio service, similar to Pandora, supported by ads.
"We agree with Taylor Swift," Bay said, "that on-demand playback of what you want to listen to shouldn't be free."
Rdio is expected to announce its Select service Thursday. It will initially be available in the United States, Canada, Australia, New Zealand, India, and South Africa, on iPhones and Android devices.
William Alden is a business reporter for BuzzFeed News and is based in San Francisco. Alden covers the technology industry.
Contact William Alden at email@example.com.
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