Rdio likes new Facebook music deal

At Facebook’s f8 developer conference on Sept. 22, Mark Zuckerberg unveiled a number of new features into the platform that integrate a gaggle of other apps and services. One of the big ones is music.

Now you can populate your Facebook timeline with a constantly updating list of the music you’re listening to from services such as Spotify, Rhapsody, Rdio and others. For those of us in Canada, so accustomed to jealously pressing our noses against the glass to look at all the fun digital goodies our neighbours to the south get to play with, the first question is, “Do we get it?” And the answer is, “Sort of.”

Obviously services like the much-hyped Spotify aren’t available in Canada, but one that is and can be accessed through the new Facebook feature is Rdio, a unlimited, on-demand social music service started by the creators of Skype.

Each time a Rdio user plays a song, it shows up in their Facebook newsfeed, ticker and timeline, giving their friends instant access to what they are listening to. By connecting their Facebook account with Rdio, existing Rdio users can instantly play or pause a song on Rdio within Facebook. For a Facebook user that isn’t a Rdio subscriber, clicking on a song automatically creates a free trial Rdio account.

This is obviously a huge development for all the services involved and for pushing cloud-based music services further into the mainstream. I spoke with Rdio COO Carter Adamson the day before the big announcement about the Canadian music market, his company’s biggest challenges and more.

CB: There are a lot of players in this space, particularly in the U.S. Where does Rdio fit in and how does it differentiate?

Carter Adamson: We’re the youngest entry into the on-demand music subscription space. The space itself has been around for more than 10 years now. I think why we’re seeing so much press on this space recently is because the whole industry has been trying to crack the code on content subscriptions, specifically, with music. We’ve gone through 10 years of DRM and tethering up, crappy playback experiences, piracy, lots of fits and starts with price points and various models. And I think we’re finally at a point where we’re about to crack the code on this content subscription model thing.

The device landscape has also changed dramatically over the past 10 years. Now “normal” people have a lot of connected devices in their lives, whether they realize it or not. We’re now reaching a point where it doesn’t make logical sense to burn your entire CD collection onto an external hard drive to move it around your various connected devices. Or even multiple external hard drives for movies and TV shows. So the only thing that does make logical sense is accessing your content from the proverbial cloud. We’ve seen this get traction in the U.S. with Netflix and movies, Hulu with TV and other services on the video side. Strangely, I think the music side is just catching up but is now at the tipping point.

There are a number of services out there. Our founders are from Skype and Kazaa, so are very familiar with the music space and just as with Skype, we were in a very crowded space. I think people forget how crowded VoIP was. There was Google, Apple, Microsoft, AOL, you name it. And the reason Skype was able to get out ahead of everyone else was because they delivered the cleanest, simplest experience that resonated with the most people. And that’s our goal with music. It’s a very crowded space. In the consumer software and web services world, it’s like the Super Bowl. There’s a lot of attention, a lot of interest and a lot of dead bodies along the way to get to the Holy Grail, and it feels like for the first time, we’re finally getting to this tipping point and that’s why there’s so much excitement around it.

Our basic premise is that, once you get beyond the access piece, which is what everyone offers—unlimited access to the world’s music—what do you next? It’s a terrifying proposition for many people. Access to all the world’s music is too much work. So our take on it was, through following people you trust effortlessly, you’re exposed to all kinds of new stuff that’s relevant specifically to you. The service was built upon this whole notion of discovery of music through people instead of algorithms.

That’s what people are most excited about, that music has been unlocked for the first time in a long time. Our firm belief is that it’s not enough to give people access to everything, you need to help them make sense of it and we’ve done that through social.

What’s the difference between the service in the U.S. and in Canada?

There’s no difference in functionality. In terms of availability, there are some things, but in total we have 11-million-plus songs, soon to be 13 million in the U.S., and in Canada we have 10-million-plus. So it’s not a noticeable difference.

How has the first year of business been?

We launched quietly last August in beta, then really turned on the proper marketing and PR in January. The growth has been very exciting since January, especially in Canada. We have an unbelievable partnership with Telus. Our Canadian growth is amazing, around 30% growth, week over week.

But you don’t have much competition here.

Yeah, there is no one else in the on-demand subscription based music service. I don’t know why.

What are some advantages in being the only game in town?

It’s been amazing and reception has been fantastic. It’s a tremendously important market for us.

Has it been a hassle getting music rights here, a la Pandora?

They’re under an Internet radio style jurisdiction, meaning there are skip restrictions, you can only play the same song so many times in a certain time period. The other weird thing about their licensing structure is that you have to physically own the CD in order to stream it. So they have a warehouse with 900,000 CDs in it. So there are obvious disadvantages with that model. But God bless Pandora for gumming it out for 10 years, making a name for itself and pushing the boundaries. Rhapsody as well. They got us through DRM and all these other painful things and we’d probably not be around if it wasn’t for them.

So the on-demand subscription process is less painful when it comes to getting music rights?

Yeah, it’s not that painful.

A lot of success in these digital spaces is about jumping in just when consumer behaviour wave is cresting at the right time. It seems like the hype over Spotify in the U.K. really helped build anticipation and acceptance of these types of services. Is that true and how do you rate the pace of consumer behaviour in this space?

Absolutely. It’s definitely getting faster. We doubled in growth when Spotify launched in the U.S. And with all these services, Amazon’s, iCloud, I think more and more mainstream consumers are being drawn to the space. There’s definitely a case to be made for, the more water, all the boats rise. We’re certainly seeing that.

And with the Facebook stuff, it should accelerate that pace of mainstream consumers using services like this.

What’s been the biggest challenge and what do you see being the biggest challenge going forward?

I think education is the biggest thing. People don’t believe that it exists. All the music in the world for 30¢ a day on all your devices. They just don’t understand that it actually exists, it’s actually awesome and every Tuesday when new music comes out, you don’t have to spend $20 or $1 on it. You can play everything. It’s very liberating. So I think you hear the words “cloud music service” and you think server technology and can’t understand how that relates to them and why they might like it. And once they use it, everyone’s hooked.

So education is a big piece. And the more water in the pond, the more marketing dollars in the space, the more people will be hooked, the network effects will turn very quickly. And I think [the Facebook deal] will go a long way in that regard.