Macworld:
The streaming music industry is about to lose a player and gain a platform. On Monday, Pandora announced plans to acquire “key assets” from on-demand streaming service Rdio, which is seeking bankruptcy protection and will wind down its current business.
The deal, for $75 million in cash, covers Rdio’s technology and intellecutal property, and Pandora says it will be offering jobs to many members of Rdio’s team. Pandora isn’t buying Rdio’s entire business for a couple of reasons.
First, to launch an on-demand streaming service like Spotify or Apple Music, Pandora will have to make its own licensing deals with the record labels, because Rdio’s deals aren’t transferable. Second, Pandora executives explained in a Monday conference call that Rdio is financially “challenged,” and would have been a drain on Pandora.
I wouldn’t take bets on Rdio relaunching. It’s also likely the first of a few more consolidations in the next 12 months.
Old businesses like the airlines and retail stores needed decades to first ruin themselves, and then the people supplying the labor and the goods. New businesses start there. That’s progress.
Streaming is a failed business model, since nobody will ever pay the amounts needed to nurture the entire music industry food chain, plus the streaming services, plus the consultants and lawyers, plus the lobbying, plus the loans and investors. It will simply not happen. At least lawyers and consultants will get some M&A money now before everything goes down the tube.
If there is no change in culture (as in people realizing that the only way to preserve things is to actually pay for them), Google, Apple and Amazon will be the only providers left, as they are the only ones not needing profits there.
That’s a shame. I haven’t used Spotify too much, but I considered Rdio to be light years better than Apple Music, which I guess goes to show that it takes more than a good product to make it in this industry.