On-demand music subscription service Rdio has partnered with Cumulus Media, an AM/FM broadcaster with 525 radio stations around the country in a deal that could help both companies achieve key goals, the New York Times on Sunday — even though terrestrial broadcasters and online music services would appear to be natural enemies.
Traditional radio companies are (understandably) terrified that once the internet gets to cars on a wider scale, and streaming albums and stations becomes the default way most people listen to music, their still-lucrative stations will decline in value — especially because advertisers pay more to reach younger demographics who have a lifetime of buying ahead. And those are precisely the ones who are more likely to get their car music from a phone.
Meanwhile, Rdio, which says it will be “wildly profitable” if it reaches 25-30 million paying subscribers, doesn’t have anywhere near that many. The company does not reveal how many people subscribe, but Facebook says it has a million users each month, indicating that Rdio will need to capture a big slice of the mainstream U.S. market to get where it needs to be.
So really, this deal is about an old-school music company insuring itself against the rising digital tide, while giving a new-school company a chance to reach music fans who have yet to “go (fully) “digital,” for free. No money changed hands as part of the deal (although Cumulus now owns a “significant” chunk of Rdio’s parent company, Pulser Media).
Cumulus radio stations will broadcast ads for Rdio on stations like New York’s Nash FM and San Francisco’s KFOG, the NYT‘s Ben Sisario reports (watch Evolver.fm chat with him). Meanwhile, Cumulus’s 1,500 sales agents nationwide will sell ads for the free, ad-supported version of Rdio that Sisario says is coming later this year (so far, Rdio has no ads, even for users of its free trial). This move will make it a bit more like the more popular Spotify, which has ads in its free desktop version.
In addition to all of this promotion to radio listeners, Rdio will get “broad access” to Cumulus’ radio programming, in case its users are interested in listening to versions of Cumulus stations online with all the talking and advertisements stripped out (i.e. these will be regular Rdio playlists or stations, not re-broadcasts of Cumulus’ actual shows).
(Image via Flickr/fingle)