Rdio takes on Spotify with free Web streaming for US users
Rdio today announced it is making its music streaming service free on the Web for all US users. In other words, you can access the company's over 20 million songs, as well as albums, playlists, and stations from any computer without paying a dime.
Context & Ripple Effects
Rdio has been circling a free tier for years: a limited Free Access offering back in October 2011 and then unlimited six-month free streaming across 15 countries in January 2013. What changes with this announcement is that the US market — its home turf and biggest subscription base — gets permanent free on-demand Web access to more than 20 million songs.
The timing is pointed. A day earlier, Spotify dropped all time limits on free ad-supported Web listening everywhere it operates, a move TechCrunch read as proof its ad engine and paid-conversion funnel can scale. Rdio's answer lands amid a rough stretch: it shut down Vdio, its movie and TV rental service, in late December after conceding it couldn't differentiate. The story drew unusually wide syndication — TechCrunch (twice), Gigaom, The Verge, VentureBeat, Evolver.fm and SlashGear all picked it up the same day.
First-order effects
- US listeners can now stream Rdio's full 20-million-song catalog on the Web without paying, directly matching the no-time-limit free Web tier Spotify introduced the day before.
- Rdio trades guaranteed subscription revenue from casual users for top-of-funnel reach, betting that free Web listening converts to paid mobile and offline plans.
Second-order effects
- Spotify now faces a direct feature-for-feature rival at the same free price point, pushing competition away from catalogs (both exceed 20 million tracks) toward discovery, curation and apps — exactly where a December 2013 column argued today's streaming services lag the metadata richness of the analog era.
- Advertisers gain a second scaled on-demand music audience beyond Spotify, giving brands an alternative as both services court ad dollars to fund free listening.
Third-order effects
- If free Web tiers prove they can fund themselves through ads, the freemium ladder becomes table stakes for every major streaming service, and differentiation migrates up-stack to personalization and platform integrations.
- A market where the entry product is free pressures smaller subscription-only players toward consolidation or niche positioning, concentrating negotiating power over labels in fewer, larger platforms.
The trend: On-demand music streaming is converging on ad-supported free Web tiers as the standard acquisition funnel, with Spotify and Rdio racing each other down-market to own the listener before the upgrade ask.