The Hot Seat: Drew Larner, CEO, Rdio

Published in The Music Network


Much has happened since Rdio opened for business here in January. For starters, Spotify has happened. Deezer has happened. Songl and MOG has happened. And – according to various industry insiders – the digital-overtakes-physical milestone has happened. For Rdio, the action hasn’t all been happening elsewhere. When the digital music service arrived here, it was Rdio’s fourth market. It’s now operating in 13 territories.

Recently, Rdio struck deals with DMG Radio Australia, and with independent aggregators TuneCore and CD Baby. Through those two licensing pacts, Rdio’s library has grown by an extra three million tracks, bringing its catalogue to some 18 million works. San Francisco-based Rdio was founded by Skype co-creator Janus Friis. It originally launched August 2010 in the US, Rdio’s top dealmaker is its Chief Executive Drew Larner, a former banker and motion picture executive. TMN caught up with Larner for an update on all things Rdio.

Why did it take so long to do these deals with TuneCore and CD Baby?

It’s not for lack of trying. Without going into specifics, every deal has its own momentum and its own issues. We had some things we needed to resolve. It’s now opened-up the platform through the self-service option that these aggregators have, which means people have access to a lot of compelling content they otherwise might not have heard. We’re about delivering the best music subscription experience, and part and parcel of that is building the catalogue. It’s a constant process to keep adding new music to the catalogue and this is a big chunk for us.

You now boast 18 million tracks. That’s a lot.
British digital music analyst Mark Mulligan has said the big catalogues contain too many covers. And he’s suggested whittling those back. Maybe it’s a case of sorting out the chaff from the wheat. But I would disagree. Having more music on there is a better thing. Yes, there might be covers or karaoke versions. But that’s what subscription is about, having the deepest and richest experience, in terms of having as much music on there as possible. I get it and it goes back to that issue of filtering. And to distinguish ourselves from Spotify and other services, I believe most of them are predominantly search-and-play, which means you need to search for what you want to listen to. Sure there are a lot of social elements (out there), but we had social built-in from the beginning, and services built around social discovery. It addresses that issue of a massive catalogue.

You’re quietly working on a program which rewards artists who bring in new subscribers?

We’re moving forward with all speed. Beyond just confirming that it’s something we’re working on, I don’t have a lot of details. But it’s something we’re planning on rolling out imminently. The idea behind it, well, a lot of it plays into these (TuneCore and CD Baby) deals. Artist compensation is the issue of the moment. People have been talking about it for the last year, in terms of do artists get paid enough. My answer to that is, if you look at the scale of what we’re doing, it hasn’t reached the tipping point yet. I think it’s coming. I wouldn’t be in this business if I wasn’t. Once that point happens and we reach a level of scale I believe we can reach, artists will be compensated at a level they deserve. We’ve started to see real significant dollars. Streaming is starting to account for a bigger and bigger percentage of the digital pie. We hit upon this idea that, if artists bring us users, they’d be more qualified to subscribe to the service. And it works out better for everybody. If we get more subscribers, the artists get more money. If the artists bring us those subscribers, why not pay them more for it.

Is Australia in your big plan?

We want to do it in Australia, and there are lots of artists we believe would be interested in it. That’s about all I can share at the moment. Australia is a market which we’re very focused on. Obviously what we just did with DMG, we think is going to be a great thing for us. Cathy O’Connor (CEO of DMG) and her team are very forward-thinking, and they really embrace new technologies and marry it to their existing platform. [Rdio’s joint venture with DMG covers cross-editorial and promotion. DMG’s eight FM stations, one AM station and digital Koffee and NovaNation, will promote Rdio’s 15 million-track service and curate playlists]

What next for Rdio?

Territorial expansion is something we’re very focused on. We’re in 13 territories now. We’re pretty much in every region in the world. We’re in Brazil, we’re looking to expand to the rest of Latin America. We have a foothold into the Asia-Pacific region with Australia, but we’re definitely going to expand into Asia. We’re looking at more partnerships.

You’ve had six months in the Australian market. What have you learned?

Australians are very technology savvy and forward-thinking in terms of new technologies and new methods of consumption. We’ve seen that in the user growth and the enthusiasm we’ve got from people who are using the service.


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