Rdio, competing for audience in a crowded online-music market, made significant workforce reductions to lower costs. Layoffs are reported to have carved out about a third of the company.
The subscription music service competes directly with Spotify, Rhapsody, Google All Access, and Xbox Music in the U.S., and more generally with Pandora, iTunes Radio, Songza, Slacker, and other radio-style streaming platforms.
In the wake of the layoffs, Rdio made confident noises about its future destiny: “Rdio confirms making workforce reductions yesterday to improve its cost structure and ensure a scalable business model for the long-term.” But the road will get rockier in the short term.
Rdio started in 2008, and opened its platform to the public two years later, about one year before Spotify expanded into the American market. Despite the early-mover advantage in the U.S., and without the significant European listenership Spotify built up since its 2008 launch, Rdio lags in audience metrics. The company did not release updated numbers today, but Digital Music News is quoting 250,000 paid members. Spotify boasts six-million paying subscribers.
At least one departing Rdio worker was a contractor, not an employee — Ian Gilman, a freelance app developer, who documented his exit on Twitter and called Rdio his largest client. It is common for companies trimming costs to look hard at their contracted labor force. But little is known about the “Who?” and “How many?” of today’s action.
Jukebox service Rhapsody, the grand old uncle of subscription music, underwent a layoff sweep in September, and a management shakeup that ushered its CEO out the door. Coincidentally, Rdio’s chief executive had announced his departure, but is still in place while the headhunters look for a successor.
Rdio operates a sister site, Vdio, which rents movies on a one-by-one basis. There has been speculation that Vdio would eventually move into the subscription model, and would somehow integrate with Rdio. The movie/TV subscription business is dominated by Netflix, Amazon Prime, and Hulu.
Speaking of daunting competition, the already crowded music landscape is about to be glutted with three additional major players in the U.S. YouTube is reliably rumored to be building a music service. Beats Music has announced that its “Daisy” listening venture will launch within months. And Deezer, a popular Paris-based international service is reportedly coming to America early in the new year.
So, by the end of Q1, the streaming music industry will be more top-heavy than it already is. The good news for consumers will be the bounty of choices. The bad news on the business side is that, to many consumers, the listening options are indistinguishable. That is a scenario in which the rich get richer, and the others get bought.