Rdio’s parting note is grow fast or big players will eat you

Music streaming service Rdio began its shutdown process this week, shortly after announcing its bankruptcy and US$75 million asset sale to Pandora.

It’s bad news for the many fans of the service, which was available in 85 countries, but it’s also a sad reminder of the state of the increasingly homogenising internet.

Quick: name an internet company that makes phones and tablets, develops search and maps, is researching voice recognition and artificial intelligence, offers cloud storage and processing, dabbles in self-driving cars and sells access to apps, video and music.

If you said Google or Apple you’d be right, and if you said Microsoft, Facebook or Amazon, you wouldn’t be too far off.

All of these companies are doing most of these things, or are planning to.

That is different from just 10 years ago, when Google was a search engine, Apple made computers and Facebook was a social network. Now the lines between these companies are blurring as they increasingly focus on competing with each other rather than with so-called bricks-and-mortar companies.

That battle has been won so now they are becoming virtual department stores 2.0.

They are all things to everyone, but if you squint hard enough they kind of look the same.

Just like in the physical world, these multifaceted conglomerates are making it increasingly difficult for the internet era’s comparable mom-and-pop shops – single-purpose internet companies such as Rdio – to survive.

Music streaming, a relatively new online business, is a good example.

Morphing out of the transaction model where users pay per song or album that has been in place since the advent of iTunes near the turn of the millennium, all-you-can-eat streaming has become the model of choice for selling music in recent years.

A multitude of efforts have arisen to partake in the ensuing land-grab to prevent Apple from dominating again.

Aside from Rdio and Pandora, there’s Spotify, Deezer, Songza, Tidal – even a back-from-the-dead Napster – and of course Apple Music and Google Play Music.

A number of these are available in the UAE, some with free tiers supported by advertising, others with additional paid subscriptions generally running at about $10 per month.

They have proven popular with music fans. Spotify is the market leader with 75 million users, 20 million of them paying, but none have yet posted a profit.

And huge acts including Adele and Taylor Swift continue to complain about low royalties from such services.

Listeners paying even a relatively low monthly fee may indeed be an antiquated idea that never catches on in an era when music is expected to be free, in which case pure-play streaming services are doomed from the get-go. Investors in Pandora, one of the few publicly held music streaming companies, seem to agree – the company’s stock is currently down about a third of its value on the New York Stock Exchange since this time last year.

The services themselves are thus being forced to branch out. Both Spotify and Pandora are adding video streaming, while Pandora also recently acquired TicketFly, a San Francisco-based start-up that facilitates buying concert tickets.

On today’s internet, it is not enough to offer just one product or service – the music streaming companies are on a path to becoming multifaceted conglomerates themselves.

Even Netflix, the video streaming giant that has more than 69 million subscribers in 60 countries, is not immune to this probable future.

The company will eventually run out of countries to expand into and, like music streaming, faces a limit over how much it can raise prices before customers revolt and revert to free options.

How long until Netflix gets into music or starts making devices that people can watch video on? Or will it also get into robot cars, virtual reality and other disparate technologies?

In the face of this trend, Rdio probably won’t be the last music service to fold. Music streaming seems destined to become a loss-leading adjunct for the internet behemoths in their quests to be all things to all people.

The internet is a big place, but to succeed and survive on it businesses need to get similarly large.

Otherwise, one of the giants will come along and duplicate what they are doing, inevitably turning them into just another wing of someone’s digital department store.

Peter Nowak is a veteran technology writer and the author of Humans 3.0: The Upgrading of the Species.


Follow The National’s Business section on Twitter

Share This Post