Business News Digital

Rdio CEO says Spotify has the wrong mindset

By | Published on Wednesday 24 June 2015


Moving again to establish his position as digital music’s most outspoken CEO, Rdio’s Anthony Bay has criticised Spotify and YouTube once more.

Taking aim at Spotify’s business model, he told Music Ally: “This is a retail business, and that’s the first thing you have to remember. It’s not an internet business. What we do, what Spotify does: it’s a retail business not an internet business”.

“This whole concept of a free, on-demand model as a stepping stone to subscription is an experiment”, he continued. “Spotify has an audience of 75 million, so wow, they have 20 million people who pay. You could also say that they have 55 million people who are getting music for free. So they have successfully converted 55 million people to ‘free’. They appear to be behaving like an internet company with internet margins, which is not this business. But whatever anyone says about Spotify, YouTube is worse”.

Continuing with his retail theme, he then compared Apple to a supermarket, saying: “The distribution of [physical] music moved towards companies for whom music is a feature, like Wal-Mart and Best Buy, or Tesco. ‘Come in to grab some lettuce and maybe grab a CD on the way out’. And in the digital world, that’s Apple: they offer music, but they offer music in the same sense that Tesco offers music. It’s not bad, but it’s a means to an end”.

As previously reported, earlier this month Bay complained that Spotify and YouTube’s free tiers are “too good”, making it difficult to launch the more mid-level options, such as his Rdio Select, that many believe are the key to making streaming profitable. How do you sell a cut back paid-for service when your competitors are giving everything away for nothing?

Nonetheless, although Rdio does not publish its user figures, Bay told Music Ally that, in the territories where it is currently available, 90% of people signing up to the $3.99 per month personalised radio Select service are new to the company. A European launch is expected imminently, should issues with licences be ironed out.