Why Pandora Bought Rdio

The bigger radio company is acquiring “several key assets” of Rdio to bolster its recommendation tech.

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Nov 16 2015, 11:04pm

Image: Rdio

Rdio, the music streaming service once seen as a more stylish competitor to Spotify, is filing for bankruptcy, and Pandora is looking to buy the tech behind one of its key features: its radio recommendations.

Pandora is acquiring "several key assets" and "many members" of Rdio's staff in a $75 million deal, Pandora announced Monday in a press release. The deal has yet to be approved by the California Bankruptcy Court, but in the event that it does happen, expect Rdio to close its doors and Pandora to expand its technology and offerings starting in 2016.

One of Rdio's biggest selling points was right in its name: its radio function, which it dubbed "Autoplay." With Autoplay enabled, the service would continue playing music to the end of time, drawing suggestions from what you just played. Compared to Spotify's Radio, it was a core feature that made it feel like the music never ended; in fact, it was almost like Spotify and Pandora combined. But unlike its two competitors, Rdio had much less success competing as a chimeric competitor attempting to meld the best of both services.

Rdio CEO Anthony Bay said the company's one biggest problem was awareness.

"The average person doesn't know what streaming music is, and what subscription music is," he said in an interview with The Globe and Mail last year.

The company also had trouble setting itself apart from other players. Take away its radio function, and the service has the same features as Spotify, Apple Music, and the rest. The company introduced a $3.99 middle-tier plan that functioned much like Pandora's already existent Pandora One, which offered free track skipping and ad-free listening. The main difference between the two is that Rdio let you keep 25 songs on your device, but no more. It was in these distinctions that Rdio tried to stick out from the crowd.

In a conference call, Pandora president and chairman Brian McAndrews made it clear that this is a technology acquisition for the company, and not a userbase acquisition. According to McAndrews, Pandora's userbase is already 78 million strong, and users listen to some 22 hours of audio a month.

"We think the real strength that we bring is from our current business in building our own upper tier offerings. But it will be building off the strength we have on our current business and the learning and technology that we will get from Rdio's tech and the people," he said.

While Rdio has always kept its number of subscribers close to the vest, it's not yet clear how what the company would do to transition its current users (or even if they want to). Pandora won't be involved in "winding down" Rdio's business, and McAndrews said that Anthony Bay, Rdio's current CEO, would not be joining Pandora.

"The Rdio team built an acclaimed product and technology platform that has consistently led innovation in the young streaming industry," Bay said in a statement. "I'm pleased that many members of the Rdio team will continue to shape the future of streaming music, applying our tradition of great design and innovative engineering on an even larger stage with Pandora."

We've reached out to Rdio to see what their plans are for their current users and will update this story when we've received a response.