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Media & Streaming

Rdio

Shut down · 2015

Design-forward, social music streaming service from Skype's co-founders that lost the race to Spotify's free tier and mobile offline playback.

San Francisco, USA2008–2015

Key metrics

$125.7M

Total funding

3

Funding rounds

Outcome

Shut down

Operations ended in 2015.

Filed for bankruptcy and sold its key assets and technology to competitor Pandora for $75 million in November 2015; the consumer service itself shut down on December 22, 2015.

2015

Financial trajectory

Funding by round

$98.8M$65.9M$32.9M$0$20M2010Early funding$17.5M2011Growth funding$88.2M2013Later funding r...

The Story

Founded

Early funding

$20M

Growth funding

$17.5M

Later funding rounds

$88.2M

Shut down

What worked

Rdio, built by the co-founders of Skype and Kazaa, pioneered a genuinely well-designed, social approach to music streaming — letting users see what their friends were listening to and follow their activity — and built a devoted following among design-conscious early adopters who preferred its interface to competitors' for years.

What didn't work

  1. 01

    Rdio required a paid subscription

    From day one, while Spotify's free, ad-supported tier removed the barrier to entry entirely and let it accumulate roughly 75 million users before Rdio could meaningfully compete.

  2. 02

    Rdio's mobile apps also lagged badly on offline playback, a feature commuters and travelers needed

  3. 03

    By the time Rdio added it, competitors had already set user expectations elsewhere.

  4. 04

    With monthly expenses exceeding $3.5 million

    Against revenue that never caught up

  5. 05

    The operational complexity of negotiating music-licensing deals market

    By market draining the company's limited resources, Rdio filed for bankruptcy and sold its key assets to Pandora for $75 million in November 2015, shutting down the consumer service that December.

Wrong Pricing ModelDistribution Failure

THE VENTURE TRAIL TAKE

Charging from day one in a market where a free, ad-supported competitor removes the barrier to entry entirely is a pricing decision that's extraordinarily hard to recover from later.

Read the full postmortem

Company details

Business model
D2C Subscription
Founded
2008
Headquarters
San Francisco, USA
Funding rounds
3
Investors
Atomico (Niklas Zennström's venture fund)

Founders

Niklas Zennström
Co-founder; co-founder of Skype and Kazaa
Janus Friis
Co-founder; co-founder of Skype and Kazaa

Sources

  1. 01BillboardRdio's Bankruptcy: Inside a Failing Music Streaming Service
  2. 02Digital Music NewsRdio Is Shutting Down In Less Than 24 Hours
  3. 03TactyqalWhy Rdio Failed? The Rise and Fall of Rdio
  4. 04TechCrunchSocial Music Startup Rdio Raises $17.5 Million

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