I think there’s no debate that a part of the future of music is going to include an access (as opposed to ownership) approach to listening to music. On a large scale, music consumers have always chosen convenience over almost everything else, and the opportunity to listen to as much music as possible, anytime and anywhere, whether connected to the Internet or not, is a compelling proposition. And while I think it’s only a matter of time before Apple gets the licensing together to re-activate some version of LaLa, there are some great services out there in the US and abroad right now that offer a really compelling approach to music in the cloud.
I’ve been checking out Rdio for the past few months, and been really impressed with what they are up to. They have a pretty extensive catalog (made all the more extensive in recent weeks with the addition of the Beggars Group catalog), and interesting social media tools to help with music discovery.
I spoke with Rdio’s CEO, Drew Larner, a couple weeks back about the service. Here’s our conversation:
Mike: Can you tell me a little bit about the background of Rdio, and how you became involved with the company?
Drew: Janus Friis and Niklas Zennstrom, who were the founders of Skype, are the founders of Rdio, and they are the ones who have been funding it for the last two plus years. I met them first in 2000 and started working for them in about 2003, when they were just kind of getting out of the Kazaa phase of their careers. So it was interesting to meet them at that point because I had come from the film business, I had worked in the film industry for twelve years. To meet them with all that was going on – it was an interesting change for me. Shortly thereafter they started Skype, and then Joost, and now Rdio. So they’ve done a lot of things, and I’ve worked with them in fits and starts over all of that period.
Mike: I talk about Rdio in some of my courses, and one question that always comes up is “Okay, Rdio sounds great, but how do I get my music on the service as an independent artist?” Is there an opportunity for folks that are unsigned to get their music on Rdio?
Drew: We don’t have a self-serve option yet. There are aggregators out there that we’re speaking with that effectively provide that service for artists. You know, content aggregation for a service like this, is a long, and I don’t want to say tedious process, because it’s not, it’s an interesting process, but it’s a long process. So to provide a catalog that you are going to charge people for, you are going to need the building blocks, which are obviously the major labels and the major Indies. You get the publishing deals in place and you start adding to the catalog over time. So right now, we’re at seven million plus tracks. Very, very deep catalog. But like you’ve said, there are lots of great indie artists out there who aren’t yet at a label or may never want to go to a label. The paradigm may be changing where they don’t need to sign with a label and you understand that stuff better than I do. As far as marketing directly, we don’t have a self-service option yet and I don’t think it’s in our future over the short-term but I think once we sign with an aggregator that is a more geared towards indie artists, then that would be the way that they can get on Rdio.
Mike: So, from an overview, you are starting with the big guys, which makes sense in trying to get all of the content that the larger population is going to be interested in, and then your going to be moving down the line into working with an aggregator that is more focused on independent artists. Is that accurate?
Drew: No. I mean we’ve already done deals with IODA and some of the bigger Indie aggregators – what I was referring to simply is almost self-serve. So I guess I’d term it non-label indie artists. Those who aren’t signed to any label but are producing music that they want to be distributed. Yeah, we’ll get there.
Mike: Maybe through a partnership with CDBaby or TuneCore.
Mike: How difficult is it for you to get the licensing deals done right now, as opposed to three years ago? Is there a shift that you are seeing with the majors where they are saying, “Streaming is definitely going to be part of the future and we have to get our content on there?”
Drew: Well, our deals are done. We needed the deals in place before we could launch the service but it is a very good question because it was an iterative process in that, when we started this over two years ago, we were trying to figure out what the right model was. We were looking at companies that were doing ad-based premium type models and personally, because I am the one who was on the hook for defending the model that we choose to my board and my investors, I didn’t really believe in that ad supported model because the ad revenue doesn’t come in at a level that is significant enough to pay for the royalty costs. You know, I come from the content world and I believe content is valuable and needs to be treated as such, so it’s not that the royalty costs are out of line, they are what they are because this stuff is valuable.
So we kind of thought about what kind of model we wanted, and we decided to move towards the subscription model. The majors, as we were negotiating our deals, were moving in that direction as well. There were subscription services out there already, of course, but the functionality in those services are not as robust as they are now. I think the most important change is the offline caching, which if you are using mobile, you are hopefully using a lot because we think that is kind of the light bulb moment. You know, “Wait a second! I can turn my Android phone into a iPod!” You know, “I have a Blackberry and I can play a thousand songs on my Blackberry!” So it creates a single device strategy, and that kind of functionality is something that over the course of the negotiations came into the deal.
Mike: Are there any limitations to how much music you can cache?
Drew: The only real limitations are on the functionality side – what your device storage limit is. If you have a lot of storage on your device, you can store as many songs are you want. On the deal side, once you stop subscribing, your music is no longer available. But that’s the concept of moving, in terms of the model, from an ownership model to an access model. Meaning that you don’t need to physically purchase every song because they are all there. Why would you need to purchase anymore when you have access to everything?
Mike: Are there any other major partnerships that are on the horizon for Rdio that people can look towards in 2011 that you can talk about?
Drew: On the content side?
Drew: We’re doing deals all the time. While we do have some announcements coming, my PR people would get pissed at me if I blew the lid off. So there is nothing specific I can speak to, but I can promise that stuff is coming. Again, it’s a process where you get those cornerstone building blocks that everybody needs for service, and from there you start adding more and more interesting elements. Whether its world music or classical music or additional deeper jazz – it’s a process! We have someone in-house who is very good and very savvy, and she is just continually doing deals. It’s just that it’s time consuming.
Mike: I was really pleased to see the Beggars Group up there.
Drew: I would agree. I’m very, very excited that Beggars is on there and by extension now, the Arcade Fire. It’s very important to have that extensive catalog.
Mike: Can you speak a little bit to the social component of Rdio and music discovery using the service?
Drew: We keep pushing new updates to the clients constantly and just keep making it a better experience in terms of finding new people to follow and giving you more information as far as new music and music that we think you would like, that we believe is unique and based on people rather than algorithms. Now we do have an algorithmic approach, I don’t know if you checked out the radio that we have? So for me, I like that because I am more of a passive listening guy. If I want to listen to Wilco, I can create a fantastic play list with Wilco, the Jayhawks, and Son Volt; that does it for me. Other people want a more core discovery experience, so we’re constantly updating and making it better, but social is really the core to our DNA. The fact is music brings people together. Music is a social conversation and that sense of community is what we really built this service around, and we believe that this differentiates us from the other services in the marketplace. We believe we’ve created a way to accurately & interestingly filter all that music to give users an experience where, instead of just a static search and play where you need to know what you want to listen to, you can come back to Rdio not just everyday but every hour and you will see new stuff! That we really believe is unique and creates a great experience.
Mike: Are you working with a third party like The Echo Nest here in Somerville for your radio algorithm, or is that homegrown?
Drew: It’s homegrown. We’re all in-house, everything is built in house. We don’t outsource, we really have a fantastic engineering and design team, and you’ve seen the result of it. It’s in-house.