Rdio To Shutter, Pandora To Acquire Key Assets

Pandora-Rdio Deal At A Glance:

• Pandora is paying $75M in cash for "several key assets" of Web/mobile subscription streaming service Rdio. 
• The purchase is contingent on Rdio seeking bankruptcy protection, after which it will shut down its Rdio-branded service in all markets.
• Pandora notes it's not acquiring Rdio's operating business, but instead obtaining technology and talent to help deliver "an expanded Pandora listening experience by late 2016," provided the needed licenses are obtained.
• The deal suggests Pandora is getting set to join Spotify, Apple, Google, and others offering a subscription-based, on-demand, music service. 
• The company's existing Pandora One service provides subscription-based, ad-free, listening for Pandora's Web/mobile radio streams.
• Pandora, whose user growth has been pressured by various subscription services, recently struck a $450M deal to buy online ticket agency Ticketfly. The company has also been rumored to be mulling an international expansion.

Pandora, already one of the biggest players in the music streaming space, has just announced it is acquiring "key assets" from fellow streaming service Rdio for $75 million.

However, reports engadget.com, this isn't just a standard case of one company buying another -- Pandora's press release says the deal is contingent upon Rdio "seeking protection in the United States Bankruptcy Court for the Northern District of California."

It sounds as if Rdio has finally run out of cash while trying to compete with giants like Spotify and Apple Music, and Pandora will be stepping in to use its technology to enhance its platform.

Using Rdio's technology could radically change the face of Pandora. Thus far, Pandora has focused on algorithmically generated radio stations based on your tastes, but Rdio's service was a full-featured competitor to Spotify that let you play any song or album you wanted from its vast catalog.

Pandora has never had specific music on demand features, so this would be a major shift in strategy that would let it compete more directly with Spotify. Pandora says it expects to offer an "expanded listening experience" by the end of 2016, which would presumably include Rdio's on-demand streaming features.

Unfortunately for Rdio's small but passionate fanbase, this means that Rdio as we know it will be exiting the markets its currently available in. For a long time, the service was looked at as a better-designed and perhaps more intuitive competitor to Spotify, but in recent years the company has struggled as Spotify kept adding new features, expanding its paid customer base and generally becoming the de-factor streaming option available.

The company confirmed the impending shutdown in a statement, saying that "We are proud to have created an innovative and critically acclaimed global music streaming service. Given the state of the streaming marketplace, we have reached an agreement with Pandora –- a leader in music streaming that shares our passion for delivering the best possible music experience to music fans everywhere –- to purchase key assets from Rdio's business, including intellectual property and technology." It sounds like many of the company's employees will continue on at Pandora, as well.

This deal enhances Pandora's already strong status in the streaming music market, but the end of 2016 is a long way away -- by the time a new Pandora service launches, Spotify and Apple Music (not to mention other competitors like Tidal, Google Play Music and Rhapsody) may have grabbed up enough of the market to make the newPandora a tough sell.