Streaming Music Doesn’t Work. So Rdio Is Launching Vdio…

Spotify imagines a world with a billion users, healthily-paid musicians, and a scaled-out business model that makes sense.  But right now, that isn’t the reality, and it may never be the reality with music alone.  Which is also why Spotify is plotting an expansion into video, and a move into Netflix territory.

Except now there’s a twist, because struggling Spotify competitor Rdio has just beaten Spotify to the punch.

It’s called Vdio, and it’s getting rolled out right now.  In a morning email, an Rdio executive called it “a beautiful new way to buy, rent, and share your favorite movies and TV shows with your friends, in real-time,” which actually sounds better than Netflix (though we haven’t tested it).  The service is currently getting previewed to Rdio Unlimited subscribers, with an iPad app and broader service pushing later today.

The question is whether Netflix (and Hulu, for that matter) aren’t already too far ahead.  Netflix has gigantic content gaps, but so will entrants like Vdio and eventually, Spotify.  It’s the same expensive headache in a different industry, except that in video, mega-companies like Comcast are also building their own ‘TV Everywhere’ solutions.  That’s unlike the major labels, which gave up their homegrown ambitions a decade ago.

Which means the battle shifts to areas like curation, recommendations, and sharing, all dicey bets in music and a wildcard in movies and television, as well.  That said, Vdio is coming to the table with some neat-o features, including a playlisting idea called ‘Sets,’ not to mention a feature that allows friends to jump into what friends are watching in real time.

The service will be limited initially to the US and UK, with web and iPad access only.

Written while watching House of Cards…

24 Responses

  1. Lynch

    This is pretty cool in my opinion. Not surprising that Rdio got the jump on this one, they are always way ahead of the curve. I’m always that surprised they haven’t gained more attention that Spotify.

    Either way, maybe this will bring a bit more traction to the music subscription marketplace. I know plenty of people who use services like Netflix, yet still have no idea there are the same type of services available for music as well.

    • dan

      What makes rdio “ahead of the curve”. Seems like they’ve always been one step behind the curve. Just curious


  2. Visitor

    I think Netflix is in it too deep to make a dent now. They have the infrastructure, many licences, the exclusive content, over 27 million subscribers, and money. Vdio has none of the above.

    • Visitor2

      It will be tough but I do like the idea of having all my music, shows, and movies in one place. It is a frustrating experience to have to cross platforms to cross media. In an age where media is so ubiquitous, streamlining the consumption and payment process is necessary. It is the first step towards being able to turn on one device and have it power my cross-platform/multi-screen audio + visual experience.

  3. coz

    Rdio did a great job with their ios app and did a very good job with their online player.
    if they can get exclusive content like Hulu and Netflix have started to do lately, this could actually be awesome.
    Streaming music works when done correctly.
    5 bucks a month for Rdio is better than listening to your music on Grooveshark where your playlists will dissappear at random.
    Spotify’s UI is terrible and you can’t even alphabatize your playlists yet.
    Not to mention their app crashes and freezes too often.

  4. Visitor

    Buy, rent and share. Doesn’t sound like unlimited streaming.

  5. Visitor

    Is RDIO really struggling? Judging by the ridiculous amount of money the spend on marketing it looks like they can pay the bills. They just put up a HUGE ad across the street from Madison Square Garden.

    • Dry Roasted

      You’re right. When it comes to burning cash, they are not struggling.

    • burning cash

      you really don’t know what you’re talking about. They are 80 employees max, one office, don’t have the ad sales overhead of spotify and the guys who sold skype to microsoft got a cool $8B. if you’re in the biz, you know rdio has been playing it cool and coy. they are working on the long term. this story and your comment seem to miss the point. no idea if they will ever win, but i can see them being around for a while.

  6. David

    I think Rdio is subscription-only (except for a short trial period – it was 1 week when I tried it), so it is probably economically viable at a lower level of usage than Spotify and other freemium services.

  7. Drake Ellis

    Quite right, ” buying” ” renting” “sharing” JUST doesn’t sound like “streaming”. I love streaming. so kill me.

  8. Faza (TCM)

    Others have remarked how the Vdio model (BRS) seems far removed from the idea of all-you-can eat streaming – which is exactly why it might work (if they can successfully challenge the incumbents – but that could be done with exclusives of their own, for instance).
    Unlimited streaming, on the other hand, is unlikely to ever be a viable business model. This is simply because there are too many up-stream entities you have to pay. The per-user revenue doesn’t scale with usage, but costs sure do (and they have to, because you have thousands of suppliers that want to be paid). Spotify and all the rest will (hopefully) figure this out eventually.
    Streaming music (meaning an access model) could concievably work. Unlimited streaming? Fuhgeddaboutit.

    • Visitor

      Now you are getting too cynical;)
      Of course unlimited streaming can work with music and movies. The customers want it but most off them don’t know it yet. Let’s wait a few years…

  9. Visitor

    When I saw the headline, I thought Vdio would be a YouTube competitor.
    That would have been interesting (not that this isn’t, but…).

  10. Champion

    What a silly headline, as if any business that expands into another market is somehow failing at their original goal. “Search Doesn’t Work, so Google is Expanding to Email” or “Operating Systems/Office Suites Don’t Work, so Microsoft is Expanding Into Xbox.” Idiotic? Idiotic.

    • Paul Resnikoff

      “as if any business that expands into another is failing at its original goal”
      That’s not what the headline is stating, it’s not that broad. But it is stating that the original goal of streaming music profitably is not working now, and may never work from a profitability standpoint.

      • Huh?

        Or maybe music worked so well for them they had the necessary capital to move into this new space…when I first heard of vdio I thought why would they ever take on such an expensive endeavor?
        they have a marketing budget of upwards of $5 million! They’re doing something right…but if you know where I can see theit financials I’d love to learn more about their model.
        amazing that they don’t get shit on like every other service does on this blog.

        • acynic

          ooohhh, a marketing budget of $5m? you think that’s a lot? did you not see it cost Spotify $400k to takeover the Youtube homepage for….a day? so yeah $5m doesn’t get you very far in mass awareness.

    • Visitor

      Silly headlines, silly pics, silly graphs, silly comments. That’s the DMN trademark. Welcome.

  11. Cynical

    It seems this business model and the music streaming equivalent are both experiments that google is watching to see how they fail, then google modifies their own streaming services, avoids the mistakes made by these competitors then crushes them (or buys them)

  12. david weiner

    As far as I can tell (I’m an Rdio subscriber, so I got in on the preview yesterday) Vdio is not competing with Netflix and Hulu. It’s more along the lines of the iTunes rental/purchase model of current and very recent movies, as opposed to all-you-can-eat streaming of deep catalog. For instance, they have the Hobbit for sale or rental at exactly the same price point as iTunes.

  13. R.P.

    Just curious. Why do you hate spotify so much? Seriously, these subtle attempts aren’t subtle at all, and the more you keep posting these articles, the more of a hater you look like. I’m not trying to diss you; there is no dissing in logic, it just is, but as they continue to pass milestones of success, you look more and more foolish. Or maybe I’m just reading into it too much.
    In full discosure, I am a Spotify user and I love it. Pandora doesn’t compare.
    Some of the most successful companies are those that aren’t afraid of restructuring their business models, so let’s not say that Rdio is a failure just yet.
    I learned long ago, that looking for the good in things is a much better use of time than pointing out the negative. Sure, you won’t get all the commenting that you do from being provocative, but you may just generate some even bigger and worthier partnerships and friends in the process.
    Just an opinion. We are all entitled to one, no?
    I enjoy DMN and reading some of these articles, in all fairness – great job.

    • Paul Resnikoff

      You know what I hate? Middle seats in coach class and bad coffee.
      Spotify? What you think is hate, is actually my decision not to be a cheerleader for this company. Instead, I’ve taken a very critical look at this company’s financials, their very questionable artist payout structures, their incredibly opaque and non-transparent accounting structures, and the potentially very perverse interests of the major stakeholders involved.
      Is Spotify a long-term play, constructed with the same attitude as, let’s say, iTunes? I’ll point you to stakeholders like Goldman Sachs, who are mostly interested in massive liquidation events like acquisitions (of the multi-billion dollar variety) and IPOs. Dig all you want on Goldman Sachs, that’s the animal they are.
      Who else? Major labels, now stakeholders in this venture, are perversely motivated by gargantuan licensing tranches and similar liquidation possibilities. And, they don’t pay their artists, thanks to endless accounting tricks perfected over the decades.
      This is your new music industry, I’m afraid. Pandora, as we’ve seen, is merely further down the road on this short-term, highly-liquid journey. In fact, you could easily argue they’re doing it better, and getting much richer. (On a side note, Wall Street analysts tell me Pandora may have even scuttled Spotify’s chances of hoodwinking another music tech IPO, but that’s another discussion entirely).
      So, hate? If that’s the opposite of blind, rah-rah cheerleading, then I’m guilty as charged. Otherwise, I’m delivering tough coverage that my readers want.

    • Champion

      You can’t write “Streaming Music Doesn’t Work” and then claim that the headline isn’t “broad.” It is incredibly broad, and the logic is terrible.
      There’s a difference between tough coverage and biased coverage. I hope that you ultimately figure it out. Or maybe the intent is to become the Fox News of digital music? That’s a totally viable strategy, so feel free to keep it up.