Rdio’s tie-up with terrestrial radio operator Cumulus Media promises to be a transformative deal for the streaming music service, according to comments made by Cumulus CEO Lew Dickey during that company’s first-quarter earnings call April 30. Cumulus, which received a minority ownership stake in Rdio’s parent company Pulser Media under the terms of a September 2013 partnership, plans to make Rdio’s service its distribution channel for “all our local brands and nationally syndicated content,” Dickey said.
The arrangement will lead to a new iteration of Rdio this summer, which will include a free, ad-supported streaming music service, according to Dickey. “This will make it a level playing field in terms of the offerings of Spotify or Pandora,” he said. “This is a necessity to be competitive in the U.S. market.” The first version of its free, ad-supported service appeared in January.
In addition, the two companies are “in discussions” to include non-music programming, including content from properties Cumulus acquired when it paid $260 million for the Dial Global radio network -- since rebranded as Westwood One -- last year. That could include podcasts, content from morning shows, sports and traffic, he said.
Once the two companies hash out their joint strategy, Rdio’s mobile service could look more like the popular iHeartRadio app, owned by Clear Channel, than its current incarnation as a paid on-demand streaming and customizable radio service. “In one app, people are able to have all of that [Westwood One content] at their disposal,” Dickey said. “It really becomes our mobile strategy, if you will.”
Cumulus already distributes hundreds of radio stations’ programming via iHeartRadio, under a 2011 deal that also includes the app’s promotion of Cumulus’s SweetJack daily deals for consumers. Dickey told conference callers that Cumulus and Rdio have not yet decided whether their content syndication deal will be exclusive or non-exclusive. “I think it’s premature to say… how that will impact our iHeart relationship at this stage of the game.”
Cumulus is the second-largest terrestrial radio operator in the U.S., after Clear Channel. It claims to reach 150 million listeners in 110 U.S. metropolitan area markets. The company agreed to invest $75 million in Rdio including promotional obligations and act as an exclusive ad sales agent for the service in exchange for an equity stake in Pulser; Dickey said it amounts to “15% to 20% of the business.”
Dickey also pointed out that Rdio is the native music app in Tesla automobiles outside the U.S., and will be embedded in the next model year’s Volvos. The service now operates in more than 50 countries, he said.
Launched in 2010, Rdio has lagged behind streaming market leader Spotify in garnering new subscribers, who pay $5 to $10 for different tiers of its all-you-can-eat service. Although it has never revealed how many customers pay for the service, Dickey said Rdio will finally share some metrics once the free, ad-supported service is launched “in the back half of the year.”