SXSW 2012: Rdio gets new look, needs more subscribers


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One of the big questions facing the industry at this year’s annual South by Southwest festival and conference is when and how music subscription services will become financially viable. Malthe Sigurdsson of Rdio simply wants to know how to get more users.

The San Francisco-based all-you-can-listen-to subscriber service Tuesday unveiled a revamped look. The service’s new iTunes-meets-Facebook makeover gives Rdio an interface that encourages more interactivity; for instance, users can simply hover over an album and instantly see who among their friends or followers has listened to it, or follow all their friends’ activity in a Facebook-style wall.


What’s more, the service has graduated from a point-and-click infrastructure to a drag-and-drop approach, allowing listeners more functionality in terms of moving songs and full albums to playlists, as well as offering more direct posting to Facebook. For those not in Austin, Texas, Rdio live-streamed details on its new features.

Rdio users have been clamoring for some of these changes, such as adding a full album to a user’s playlist, for a while. ‘It’s a simple feature and we could have done it a long time ago,’ the company’s vice president of product Sigurdsson said. ‘But we wanted to make sure that every music object on the site could be dragged and dropped. The dragging is in the easy part. There was no good place to drop the stuff in the current Rdio. We needed to split the content up, and we needed to make sharing easier.’

Last March, the question of when Sweden’s Spotify would launch in the U.S. became a hot topic at SXSW. By that time, Rdio, which was introduced in 2010, had long been on the market. Spotify, however, entered with a free, ad-supported listening model, and with Rdio then offering only a seven-day free trial period, Spotify was seen as having the advantage for new users. To answer, Rdio last fall introduced a free platform based on an unpublished monthly quota. Like others in the streaming space, Rdio hopes to up-sell users to a subscription, offering multiple tiers and an unlimited listening plan for $9.99 per month.

Today’s redesign points to the growing competitiveness in the still-nascent market, and Sigurdsson spoke to Pop & Hiss about the changes, as well as his thoughts on the budding subscription universe.

As the streaming space has gotten more crowded, how has that impacted your thinking in terms of reaching new consumers? It wasn’t until last fall, for instance, that you added a free component beyond the seven-day trial. ‘Product-experience wise, I think we were ahead. But it was clear that business-model wise, there was a huge push to offer more free music to people. That dovetailed nicely with what we were thinking, however. Before, we gave people seven days and if they liked it they could subscribe. That’s all well and good, but music in the cloud and subscriptions are quite a different experience from what most people are doing now, which is buying on iTunes or listening on CDs. So it takes more than seven days to figure out if this is something for you.

‘More than just focusing on the fact that people want free music, it’s really aimed at the purpose of allowing people to evaluate if Rdio is for them. I’m confident to put my product against any other, but it was not realistic to ask people to use this for seven days and then change the whole way they have been listening to music.’


How many songs can someone listen to for free?

‘The way it works is you sign up for Rdio and you get an amount of music. We don’t put a number on it. We put a little gas gauge on the left hand side of the site so you can see the amount of music you’re listening to. That will give you an idea about how much music you have. Every month that gauge is re-upped and you get a new batch of free songs.

‘The aim is to get people to use the product in a way that’s meaningful for them, but not to give them all the free music in the world. There are plenty of places to pay for your music, and if you don’t want to pay for music, I don’t believe Rdio needs to sustain that. We’re here to work together with labels and artists.’

How quickly does that gauge empty?

‘There are people who do just use the free service, and there are heavy users who go through that gauge the first three days of every month. I think it’s enough to give people the opportunity to check out Rdio, but it does not give someone who isn’t inclined to pay thousands and thousands of songs.’

Your free model steers clear of advertising. Why not go the ad-supported route and put a higher limit on the amount of songs people can sample?


‘To us, that goes back to the experience. I’ve tried and used competitors’ services, and I get [angry] when I’m listening to an album and there’s an ad for a tire service. It doesn’t jibe with the product we think people who enjoy music should be subjected to. I don’t think there’s a way where we can put ads in the product that isn’t detrimental to the user experience.’

One of the main thrusts of this redesign is to put the social aspects at the forefront. How important is Facebook integration to the revamped Rdio and the subscription space in general?

‘While I don’t think the music integration on Facebook now is how it will be forever and forever, I think it’s a great way to start. You put some music icons in people’s feeds and in the sidebar. It’s not a super-organized discovery, but it’s a nice serendipity moment, a way to stumble on a new song or be reminded of an old favorite. But discovery through people is way more effective than relying on a machine to do everything, or relying on a search-and-play service.’

What still needs to happen for users to embrace this world?

‘For some people, seven days is enough, but I know there’s a whole bunch of people who need a good three, four or five or six months to discover if this is for them. That’s really the main thing that we and everyone else needs to overcome. That is our main task. Talking to people and seeing the way they behave on Rdio, there’s a whole group that needs three months or more to really decide.’

There’s a few panels at SXSW specifically dealing with streaming and music in the cloud, and the big question seems to be whether it’s financially viable.


‘The main issue is we need the market to be much bigger. If you take the total number of subscribers around the world for all on-demand music services, I’m willing to bet it’s less than 10 million. I don’t have a super current report on me, but that would be the total number of paying subscribers.

‘It’s everyone’s problem -- and everyone’s job -- to increase that number. It doesn’t matter how many users we have, or Spotify or MOG or Rhapsody or anyone else. It’s still not enough. We look at Netflix, and they have more than 20 million subscribers. We need to start talking those kind of numbers before this whole thing becomes really interesting.’

‘For some super mega-stars, it can be a real challenge to see where a streaming service makes sense for them with the current size of the market. I think it’s everyone’s job to participate in helping music move on from the a la carte download to cloud music. Until it gets there, I sympathize with that challenge and understand why bands and managers would make that decision.’

Is there a risk that certain aspects of the industry won’t be patient enough?

‘There’s always that risk. I firmly believe that we will get to a much better place. There will be ups and downs and lefts and rights, but I’m confident we can get there.’

What can you say about where Rdio is in terms of its number of subscribers?


‘We’re not sharing those numbers, but it gets back to the discussion I was getting at before. It doesn’t matter, as the whole market is not big enough. Even if tomorrow I could snap my fingers and get all the subscribers [of all the services to switch to Rdio], it still wouldn’t be enough. My job would still barely have begun at that point. We need to expand the whole market into the three-digit millions of people. We are in the extreme infancy of that task.’


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-- Todd Martens