Rdio readies ad-supported free listening, thanks to Cumulus partnership

cumulus and rdio 300wMusic service Rdio will upgrade this summer to offer ad-supported on-demand listening to its music catalog. The announcement was made by Lew Dickey, CEO of Cumulus Media, which acquired a 20-percent stake of Rdio in September. As part of that deal, Cumulus is the exclusive sales agent for Rdio in the U.S.

Currently, Rdio offers free streaming of “stations” — playlists that are based on an artist or song, and which include related artists and songs. that type of non-interactive listening is like Pandora’s service. But if you try to listen to a particular song or album (as in Spotify, for example) in Rdio’s app, you get this curt message: “”We’ve started a station. Upgrade to play albums and playlists.”

Interactive listening to selected artists and albums is typically monetized by commercials or paid subscriptions. Plugging in the commercial part fleshes out Rdio’s service and models it similarly to competitor Spotify. (Beats Music, rhapsody, and others offer subscriptions only, and have not entered the ad-selling business.)

Dickey made his comments during yesterday’s quarterly earnings call. Here are his complete remarks around the Rdio plan:

“I’d like to update you also on our partnership with Rdio. For those of you who are somewhat new to our story, in September last year, we forged a partnership with Rdio, which is a digital music app, whereby we became the exclusive ad sales agent for all inventory in the U.S. We also provide Rdio with our content through WestwoodOne and expertise in content curation. And we have a promotional obligation over the next 5 years. In exchange, we own 15% to 20% of the business with a potentially large growth opportunity.”

“As we at Cumulus are very focused on being a leader in audio content, we understand the necessity of delivering this content wherever and whenever the consumer wants to receive it. Over time, we expect Rdio will become the digital audio distribution extension of all of our local brands and nationally syndicated content. Through our ad sales relationship, Cumulus will benefit as we create integrated, digital and mobile ad networks that allow advertisers to seamlessly buy across our platform at scale.”

“Now while operating in over 50 countries today, Rdio is still relatively new to the United States. A new product launch is coming this summer that will focus on providing a free ad-supported option for consumers to enjoy the platform. This will put it on — this will make it a level playing field in terms of the offering of Spotify or Pandora. This is a necessity to be competitive in the U.S. market. Given that Rdio — given that the Rdio platform is generally deemed to have one of the best user experiences in the industry, we are excited about this opportunity for the business and we look forward to providing more detail in the future.”

Brad Hill