Business Matters: Rdio Unveils Free Listening Option
Business Matters: Rdio Unveils Free Listening Option

Rdio will launch a free version of its cloud-based music subscription service, chief operation officer Carter Adamson tells Billboard.biz. Since its launch last year, the service has been primarily a paid service, with the exception of a free, seven-day trial period for new users. "We've realized over the past year that free is absolutely a very powerful tool in our customer acquisition strategy," he says.

The news comes days after MOG announced http://www.billboard.biz/bbbiz/industry/digital-and-mobile/mog-adds-free-music-tier-1005353212.story the addition of a free tier to its subscription service. Both announcements add to the anticipation for Facebook's f8 devlopers' conference on September 22. The company is expected to announce product integrations with a variety of music services.

A few key details are unknown right now. Adamson said the launch would be "soon" and the amount of listening afforded to nonpaying users would be "generous" and enough "to really experience the service unfettered."

But Adamson did reveal a few other aspects to the upcoming free service. It will not contain any advertising. It will not limit access to either product features (such as playlist creation) or catalog. And the amount of free access will vary over time as the company continues to analyze data on its users' behavior, reflecting the Rdio's data-driven approach to its decision. "We have very good ideas about different classes of users and how quickly they convert and how much they consumer and when they consume," he notes.

Rdio's main limitation to the free service will be a common one: it won't include mobile access. From Spotify to MOG, there is a well-established hierarchy of service tiers and their costs. Customers pay less - or nothing - for desktop access but pay more for use of smartphone apps. The basic desktop price is $4.99 a month and the tier with mobile access costs $9.99 a month.

"The big conclusion here is that mobile is the key perceived value," explains Adamson. "People have been and will always be willing to pay for mobility. I think the industry has become more amenable to experimentation on the web. YouTube has been free forever. So has Pandora. There has been a ton of ways to get music for free over the years. We've come through freemium and totally free and illegal free. I think we're zeroing in on a model that might work here and using the web specifically as a marketing tool to acquire customers that are willing to pay for mobility and content."

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