Rdio joins Spotify and MOG with free music offering
The announcement queues up Rdio to be the next subscription music service to dangle a free component to potential customers in hopes they will pony up $5 to $10 a month for better, premium versions.
Another company, MOG, on Thursday unveiled FreePlay, a browser-based version of its premium, on-demand service, that lets users listen free of charge if they do things that help the company recruit new members.
Unlike MOG, Rdio plans to keep ads off its free plan, Larner said. MOG has said that it may start to introduce ads to its free service in March to subsidize it.
There is one similarity: Neither is saying just how much free music they will give away. A MOG spokeswoman said that the amount would be "robust," but that the company is deliberately keeping things vague in order to encourage users to explore the service to see what actions -- such as watching a movie trailer or exploring new music -- would yield them free music.
By not committing to a certain number of tracks or hours, as Spotify has done, the companies have some wiggle room to throttle the amount of free music they dole out. Doing so would give the companies, many of which operate on venture financing, more control of their costs -- they must pay royalties each time a song is played. Rdio itself is partially funded by Niklas Zennstrom and Janus Friis, the founders of Internet phone service Skype.
"We’ve always acknowledged [that] free is probably is the most powerful way to get people in the door," Larner said. "The challenge is to do it in a way that makes economic sense."
-- Alex Pham