On-demand music service Rdio and broadcast radio network Cumulus Media have entered into a partnership that will provide Rdio reach and resources and give Cumulus an additional online platform for its content.
The deal, first revealed by the New York Times, will give Cumulus an undisclosed stake in Rdio's parent company, Pulser Media, and provide it a different way to serve its content to listeners. (Cumulus has made its content available via Clear Channel's iHeartRadio online radio service since December 2011.) No cash is changing hands in this deal, according to the Times.
In Cumulus, Rdio gets a major partner with 525 stations in 110 U.S. cities and, according to the report, promotion on Cumulus stations. In addition, Rdio will use Cumulus's sales force to sell advertising for a free version of the service. Adopting a freemium model could help Rdio narrow the gap between itself and Spotify, the world's leading subscription service with over six million subscribers and 24 million monthly active users. Spotify offers the type of freemium model being adopted by Rdio.
This isn't Rdio's first partnership with a broadcast radio company. Rdio already has a partnership with Australian broadcast radio company DMG that's very similar to its relationship with Cumulus in the U.S. DMG provides programming and helps raise awareness for Rdio. The broadcaster also serves the advertising for the freemium service launched in the country last month.
The joining of Rdio and Cumulus makes sense given the current dynamics of the music subscription market. Although the company does not release numbers, Rdio is believed to be behind Spotify, Muve Music and Rhapsody in the U.S. and behind Spotify in other countries as well. Changes in leadership suggest some subscription services are trying not to get left behind. Rdio is currently looking for a new CEO. Rhapsody is reported to be seeking a new president. Muve Music assumed new leadership late last month.
Partnerships with Cumulus and DMG are helping Rdio kill two birds with one stone. They allow Rdio to effectively outsource its advertising sales function to large, established companies. Adding the sales function allows Rdio to create a better freemium product. In offering more free listening time, Rdio may attract more listeners and ultimately convert more of them into paid subscribers.