Rdio, the subscription-based music streaming service, is taking on the bull by its horns (pun intended). It landed in Spain this week, defying the country's infamous track record with online piracy and blatant consumer unwillingness to pay to listen to music online.
San Francisco-based Rdio, the new creation of Skype co-founders Niklas Zennström and Janus Friis, announced in a blog post Wednesday that Spain and Portugal were its new European markets, following Germany in January, and joining the US, Canada, Brazil, Australia and New Zealand.
Access to its collection of 12 million songs costs 4.99 euros (about $6.65) with a web-only subscription, and 9.99 euros ($13.32) in combination with mobile device subscriptions available for iPad, iPod Touch, smartphones (iPhone, Android, BlackBerry, Windows Phone 7) and the Sonos wireless audio system. A seven-day introductory trial is also offered.
Rdio will rival several different music streaming services available in Spain, but its primary competition comes from Spotify, which dominates the Spanish market with some 4 million subscribers, a figure the company's representative in Spain Lutz Emmerich cited in October. The subscriber to user ratio, though, is one of the lowest for Spotify.
Rdio did not reply to requests for comment.
The streaming service's arrival here illustrates the growing interest in Spain, despite its reputation for rampant illegal downloading. "Spain, which should be the powerhouse of repertoire for Latin America and the US Latin market, is effectively a dead market," Rob Wells, president of global digital business at Universal Music Group, the world's biggest label, was quoted as saying in the 2012 Digital Music Report released January by the International Federation of the Phonographic Industry.
Then again, music streaming is the exception in Spain's track record. The country's music industry umbrella group Promusicae said last month in a report that digital music sales soared 20 percent in 2011 to more than 46 million euros, while the total market share grew to 31 percent.
Streaming experienced a 75 percent jump to 16 million euros and now accounts for 35 percent of the digital market, more than any other, including downloads.
The biggest challenge for Rdio though will not be the competition per se, but Spanish consumers. Unlike Spotify, Rdio does not offer a free service paid for by advertising. And most online music users here refuse to pay, according to a survey released Thursday.
A staggering 75 percent of Spaniards online users said they are not willing to pay for content, nor to listen to advertising for a free service because the government already pays for that, according to the annual survey results of AIMC, an online research association that has tracked trends since 1996.
The Spanish government agreed to compensate copyright owners for piracy losses through the state coffers, but the exact mechanism or amount is pending until the government's budget is released late in March.
The study also shows streaming services like Spotify lost users when they transitioned into subscription-based services, not unlike other countries, but increasing revenue is promising.
"We're excited to launch Rdio in Spain and Portugal today. Now you can reinvent the way you discover, listen to and share music," the company said in its blog post. "And because Rdio is also available in other countries, finding new music is even more fun because users from all over the world are also sharing their discoveries."
Spain and Portugal are considered an ideal market for Rdio's market niche that combines streaming and social networking because of it ties to Latin America.