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Rdio launches freemium option in US

By | Published on Friday 17 January 2014


It’s like my grandma always used to say: “Mix a bit of time and envy, and all streaming services will add a freemium option eventually”. If I remember rightly, it was a saying she picked up during the war.

And so it came to pass. Yes, the fifth Beatle of streaming music Rdio has announced it is launching a free-to-access version of its fully on-demand musical flim flam in the US, seemingly powered by its previously reported alliance with Cumulus Media, the Paul McCartney of American radio. Having taken a small stake in Rdio, Cumulus brings with it a sales house and promotional platform ideally suited for a freemium streaming set-up in the US.

Although most streaming services initially come to market with a subscription-only business model, perhaps offering some nominal previews or a four week free trial, most ultimately adopt the Pandora/Spotify approach of offering a fully-fledged ad-funded freemium entry-level option too.

Though said streaming firms don’t always seem too certain whether that freemium service is a serious revenue generator and equal strand to their business, or just a loss-leading marketing platform to persuade people to sign up for premium. That said, for the last couple of years you’ve sensed that in most cases the latter is true, ie freemium is a marketing tool.

And it works to an extent, given that Spotify has often enjoyed faster sign-ups than most of its competitors when it launches in a new market. The challenge there is what to deprive freemium users of in order to persuade them to upgrade. There may be a monthly listening limit on the free service (though Spotify has now got rid of that completely), and premium users may get better audio quality or – most commonly – better mobile functionality.

Though, in an increasingly competitive market, most services have been slowly enhancing their freemium services in the last year. What’s not clear is if that’s based on a marketing plan that says “this year, let’s get millions of freemium users so we can sell them premium next year”, or whether those digital firms now see a second ad-funded revenue stream as crucial to their businesses again. The problem is, the subscription approach to streaming music makes much more sense from a commercial perspective.

The launch of freemium Rdio, which will only really apply to the web-experience, with free users limited to a Pandora-style interactive radio experience on mobile, will be backed up by a big promotional campaign on Cumulus radio stations. The push will come as the big Beats Music streaming service goes live, it without a freemium option. For now. The in-the-pipeline YouTube audio service is also expected to launch premium only.

It remains to be seen if, through the new freemium offer Stateside, Rdio can become the Ringo of streaming music. Or once Beats goes live, will it be more of a Jane Asher. Still, those are great backing vocals on ‘All You Need Is Love’.