Rdio is the forgotten player in streaming music.
The service is a bit like a Spotify-Pandora hybrid, marrying a free, ad-based internet radio service with a subscription-based, on-demand offering. It was created by the founders of Skype and counts broadcast radio giant Cumulus Media as a shareholder. And it has won praise for its beautiful design and interface.
Quartz sat down with the company’s CEO, Anthony Bay, a former Amazon executive, for a wide-ranging discussion about the company and the broader streaming music landscape heading into 2015.
This interview has been condensed and edited for clarity.
Taylor Swift’s war on Spotify
The singer songwriter abruptly withdrew her entire catalog from the Sweden-based streaming music service last month. But (with the exception of her latest album) it remains available on Rdio and various other services, which do not offer free on-demand listening.
Anthony Bay explained:
What she said to Spotify was, “I don’t want my music on your free version.” Spotify’s position was, if you won’t give it to us for free, we won’t put in the subscription service. So in a sense it was Spotify who turned down Taylor Swift.
It highlighted what is really going on. In a sense, it allowed us to highlight the difference. Here is our version of what makes sense; here is theirs. Here is a big person saying what they feel.
She is not anti-streaming. She is not actually anti-Spotify per se. She is anti free on-demand music.
Bay went on to make a counterintuitive point: “That’s good for us,” he said, explaining that consumer expectations that on-demand should be free are hurting the industry. Despite the drama of Swift’s stance, he said, “I think it is going to be good for the industry long-term, because part of the problem with streaming right now is that free on-demand is too good [to be true].”
On the threat posed by Apple and Google
YouTube, the Google-owned platform and biggest streaming site of any kind, is about to launch a paid service, Music Key; while Apple, the world’s biggest company, is reportedly going to integrate Beats Music into iTunes next year.
Bay said he’s not concerned about those ventures’ possible impact on his business:
YouTube has never been successful at getting people to pay for something. YouTube’s the biggest thing on the planet, but not for paid. Most people don’t have a commercial relationship with Google. With Apple you buy stuff, with Amazon you buy stuff, with Google, you use it, but you pretty much don’t pay for it. I think the free YouTube is a bigger question.
[Apple] has to compete on quality of music and user experience. And iTunes Radio is a good example. Nice service, but it didn’t take over the world. Would I underestimate a subscription [service] from them? No, certainly I would never underestimate them, but I don’t think there is any reason to believe either of them will have the dominance they have [elsewhere].
On Spotify and its highly anticipated IPO
It’s surprising they haven’t filed. There must be something going on. They have an expensive business model. What you can say is there is a lot of investor interest in the category. Right now the only [publicly traded streaming music stock] you can buy is Pandora.
On Pandora Media
The biggest internet radio service in the US has suffered a sharp decline in its share price this year amid mounting concerns about its royalty costs.
They are vulnerable. Most of the nervousness is, what’s the Copyright [Royalty] Board going to do? Can you imagine sitting there and saying alright, I am waiting for the US government to set my cost? It’s not a great way to run a business.
We think there is an opportunity to provide an alternative to Pandora in this country and, probably more importantly, outside.
On tension between artists and streaming services
Our whole business is based on goodwill with artists and labels, and everybody feeling like it makes sense. I don’t know that I’d be picking fights; it seems shortsighted.
As streaming and subscriptions become bigger business, these things matter more. Ten years ago this was the debate about iTunes; iTunes was the devil. Now iTunes is the establishment. This is in a sense a replay of everything that happened with iTunes ten years ago. It’s disruptive, its growing, and people are trying to figure it out.
On Rdio’s future plans and funding
We are privately held, pretty much by a single guy [Skype founder Janus Friis]. We raised some money from a company called Shaw Communications in Canada, and we are looking at options.
On whether streaming music can go mainstream
We haven’t had that “Netflix moment” yet. Netflix took a while, and then there was that Netflix moment where very few people [who] pay for broadband at home don’t have Netflix.
Is it a service like us that drives that awareness? Is it the music labels? Or all of the above?
Is it a winner-takes-all market?
Bay was very clear on this point: No. The industry can support multiple players and a niche product can thrive, he said.
There isn’t one single travel website, there isn’t one single movie retail service…What could any one company do to monopolize [streaming music]?