Rdio Says They’ll Be ‘Wildly Profitable’ With 25-30 Million Paying Subscribers…

What would it take for a streaming music service to move from ‘unsustainable’ to ‘wildly profitable‘?  This is a winnable numbers game, according to now-exiting Rdio CEO Drew Larner, who recently put some numbers on smashing success.  “With scale, we can be profitable,” Larner told NPR.  “Wildly profitable.”  

“I define ‘real scale’ as 25 to 30 million subscribers.”

Rdio is still refusing to disclose its paying subscriber tallies, which seems to confirm rumors of low uptake.  Spotify, by comparison, has 6 million paying subs and is preparing to announce its 7 millionth soon.

That makes 25 million (or so) sound reachable, but at what cost?  This is a pricey finish line: last year was one of the most successful yet for Spotify, but the company still lost more than $75 million during the period.  Overall losses now top $200 million, since 2008, with broader funding levels estimated at $288 million.

22 Responses

  1. Iceberg

    It costs Spotify $200 MM to get 7 MM subs. So to get 4X that might also take 4X more: $800 MM to reach profitability. Makes little sense.

    • GGG

      Unless they have the worst business plan in the world, and not one investor did their due diligence to notice that, no, it won’t cost that much.

  2. RCW

    From everything ive been hearing about them recently i wouldnt bet against Rdio…

    • Alex

      Really? From what I’ve read most of their management has left the company recently. Not a good sign that things are going well.
      Surprised Paul hasn’t digged into this a bit more. I’d love to hear what the deal is behind these departures.

      • Really Really?

        No need for Paul to dig in, here are those management changes you seem to be talking about.

        Maybe they aren’t as big as Spotify, but everyone in the valley and most music biz people if asked, will say they use Rdio over Spotify and its not even close. With the Skype guy’s money, they aren’t going anywhere but up.

        • ok yeah

          everyone in the valley uses it? please tell me how that means the rest of the country will use it.

  3. FarePlay

    Sirius is profitable and has 24m paying subs and it’s expensive. It has all those subs because when people buy a car they get 3 months free Sirius; then they have to pay and the car owners do. They “value” the service.
    The question is why can’t or won’t the others be more aggressive and stop fooling around with these free subs? Heck, Pandora just caved on their 40 hour free limit policy.
    Big hat, no cattle.

    • Paying Sub

      my mobile plan is too costly for me to stream in my car, so i listen to the radio while driving, but listen to rdio whenever at work, home, friends , etc.
      rdio free sub is short and it’s great to see how deep the catalogue is, that’s what sold me. i would have never paid upfront to see what they have, or maybe i would have, we’ll never know.

  4. Excuse me

    Who are all those paying subscribers?

    Why should someone pay for a song that can very easily be found for free and legally on the web (YouTube, etc.)???

    I’ve asked more than 1,000 people so far and NONE of them pays for music. So, who are all those people that pay to listen to music that can be found anywhere for free? I’d like to meet a few of them some day.

    • Paying Sub

      I am and at least 5 of my friends.
      who are the 1000 people you asked? do they have jobs?
      “Why should someone pay for a song that can very easily be found for free and legally on the web”
      – not everything is on youtbue
      – not everything on youtube is ‘legal’
      – downloading bootleg isn’t as easy as searching for the record on rdio and clicking ‘play’ , adding it to your collection, and/or making a playlist with some of those songs
      here’s a challenge, find me this in under 10 seconds, which is about how long it took me to find on rdio. find me the entire album not just the single, and i’ll give you 60 seconds, 6x longer than it took me.

      Lastly, ‘my collection’ on rdio doesn’t have to be backed up ever. it just exists, so have fun watcing ads on youtube.

      • Visitor

        If rdio would allow me to mix in songs I own and they don’t have so I can have a complete music library then they would have me as a customer today. I requested that feature and was told they had no plans on adding it because it isn’t social, so screw them.

        • Paul Resnikoff

          I’m a subscriber like the fellow above. So far I haven’t had much of a problem with them missing something in their catalogue I want to listen to. I’ve got 20,000 songs in my library, and I can think of less than ten albums I enjoy that aren’t present. But I have those ten on Itunes to listen to whenever as well. Not the end of the world to me in the grand scheme of things.

          Although yes, it would be nice to import some of your own stuff. Not enough local bands have their music on these services. Still have to go find them on bandcamp.

        • Visitor

          I would happilly pay ten bucks a month to have my library organized, full, and on-hand whenever I want it. Half the shit on youtube has horrible audio quality, and I don’t want to search for every single song or record I’ve ever listened to, and proceed to watch ads before listening to each one. And what about when I’m driving, on the go, etc? I don’t want to be fumbling with the youtube search button every couple minutes.
          Sure, youtube is free, but that means absolutely nothing to me.

        • Chris2

          @Excuse MeNot all adverts on YouTube are prerolls – when I looked at the link you posted I could see several ads dotted around the page – all of which will have earned the content owners revenue

        • Paying Sub

          hey try that again, it’s still on rdio btw ;

          This video contains content from AdRev Publishing, EMI, CD Baby, Time S.p.A., Warner Chappell, Sony ATV Publishing, UMPG Publishing, SACEM and PRS CS, one or more of whom have blocked it in your country on copyright grounds.

          • Excuse Me

            @ Paying Sub

            Honey, YouTube is just one of the millions of places where you can find a song, an album, or a video for free. The songs of the specific album are most probably still online for free streaming/download on YouTube (under a different name/url) and/or on other music/video platforms. You have to search for a few seconds to find it, but I won’t give you the pleasure to tell you where someone can still find the whole album you mentioned for free (I don’t have the time to do that).

  5. Jason Miles

    What do you expect them to say-They’re going to lose money and they’re business will fail? They have to do financial engineering to make the VC guys happy so they can get more funding. So freakin obvious. All these companies talks about how they’re going to make money and much of it is all Smoke and Mirrors

    • VC

      Spotify has VC $ up the ass, Rdio doesn’t, which is probably why Rdio is taking it slow and Spotify is spending $ like it is water.

  6. Zog

    What kind of business plan do any of these company’s have and who created them and who bought into them? Alot of questions but the answer is unless you subsidies the cost (examples,Apple and the phone company’s) it will be impossible for any of these business to work.
    There only saving grace is WiFi if it continues to go global and can remain free(subsidies) but, you’d better look over your shoulder with Apple and I-radio and I-TV and WiFi you can take off the shades the future in 5 years is not so bright.