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Rdio bankrupt; Pandora acquires assets

Pandora has announced that it will acquire key Rdio assets, as Rdio moves through bankruptcy. Terms of the asset takeover are subject to approval by the bankruptcy court.

“Technology and intellectual property” will be acquired from Rdio, according to Pandora’s announcement. The purchase price is $75-million. Some Rdio employees will migrate to Pandora. “The Rdio team built an acclaimed product and technology platform that has consistently led innovation in the young streaming industry. I’m pleased that many members of the Rdio team will continue to shape the future of streaming music, applying our tradition of great design and innovative engineering on an even larger stage with Pandora,” said Rdio CEO Anthony Bay.

This double announcement — Rdio’s bankruptcy and Pandora’s acquisition — leaves many open questions that probably won’t be resolved this year. While Rdio did operate a radio-style non-interactive, ad-supported listening platform, similar to Pandora, it also offered a fully interactive subscription tier. That business will probably not be integrated into Pandora; the press release states: “Pandora is not acquiring the operating business of Rdio, and is acquiring the technology and talent to accelerate its own business strategy.”

Pandora’s business strategy competes directly and aggressively with broadcast radio and share of advertising. The subscription music business competes with music sales, and requires directly negotiated music licensing relationships that don’t appear to be part of the acquisition.

Rdio was partially owned by Cumulus, whose sales force fueled Rdio’s advertising revenue model. That relationship is not mentioned in the announcement, but presumably does not factor into the technology and talent acquisition.

Will the Rdio brand be re-launched? Another unanswerable question at this time. The easiest presumption is that Pandora “will be winding down the Rdio-branded service in all markets” (that much is promised), and Rdio will be wound down for good.

More on this as it develops.

Brad Hill

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