Music Streaming Service Rdio Shuts its Shop, Pandora Buys the Assets in a $75 Million Cash Deal
Pandora has bought the distraught music streaming service Rdio. Both the sides have confirmed in a blog post that acquisition has taken place and the deal includes pumping in $75 million in cash, which seems to be earmarked for the purpose of bringing life to Rdio. Pandora seems to have acquired the key assets from Rdio just as the music streaming service filed for bankruptcy.
Rdio has confirmed in the blog post that it will be shutting the shops in coming weeks, till which the services will be uninterrupted. This is not the first time the Digital Music economy had to face the wrath of sketchy economics along with the issue of loyalties to the music labels.
The chances are that someone other than Pandora might just come and buy the Rdio. The company said in a statement “While we are filing for bankruptcy, because the planned sale to Pandora is contingent on such a filing, by law Rdio is required to entertain competitive offers during the bankruptcy process that is being managed for us by Moelis & Company.”
If Pandora’s deals see the light, it is most likely to create its very own Rdio type of streaming service blending it with its own on demand streaming, something the company had been mulling from some weeks now. The deal will allow Pandora to buy the intellectual property and the technology, not to mention the Rdio team members who will be a part and parcel of this deal.
Pandora’s Mc Andrews told TechCrunch that they didn’t intend to buy the Rdio business outright as “This would have been a drain for us, and Rdio is financially challenged”, he further added “Those are the two reasons we did not acquire the business but did buy the technology IP.”
He further made it clear that adding more services to the Rdio will be of essence and the company has been trying to lower royalty rates on its music plays and is also making way for the songwriter rights holders.
That being said, Rdio investors have been smacked down by the poor returns as the company was valuated at a whopping $500 million in 2013 and had successfully raised around $125 million from several investors. Rdio had a tough time pitting against the likes of Spotify, Apple Music and other streaming services and the company debunked the need to reveal the total number of users as “it is irrelevant since the services are shutting down and not transferring.”