Rdio Embarks on Experiment to Gain Subscribers Through Artists

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(from Billboard.biz, October 2, 2012) On Tuesday, October 2, the music subscription service, Rdio, launched a new program that is attempting to solve the two problems of subscription services: paying artists too little and lack of subscribers.  The solution is to pay the artists directly for the new subscribers they bring to the service.   For every subscriber an artist brings to the service, the artist will be paid $10 regardless of how long they subscribe subscription tier.

Rdio is a lot like a social network profile, and wants to use artists as brand ambassadors to help connect with fans.  With Rdio, followers can track and follow their artist’s favorite albums, playlists, and songs.  The new artists program could give Rdio a heads up in the industry and give the service an edge in having an exclusive time window on a new release.  Emily White, Artist Manager of Whitesmith Entertainment, states that the content in the service could play an important role in the artist program by spotlighting an album and artist.

Rdio is setting itself apart from other services, such as Spotify, by paying artists a fair price of royalties.  Spotify has been on the hot seat with artists such as Adele and Coldplay, who are delaying their release of albums to streaming services because of unfair royalty payments.  Spotify and other music subscription services have caused a lack of transparency for artists and managers, low revenues to artists and subscription services, and the margin of difference between streaming royalties and download royalties.  This new program of Rdio will be a more cost-efficient way to grow because it’s performance-based.  Rdio might not be able to change the way it pays labels, but it can pay artists by turning them into brand ambassadors and direct marketers, which should attract more artists.