Music streaming service Rdio today announced a free six-month trial period will be available to Canadians who sign up for the service online. The Canadian free-trial is one of a reported 15 similar trials taking place in countries with the service.
"The general concept is the idea of allowing people to be on the service for free for an extended period of time," Rdio CEO Drew Larner tells Huffington Post. "The thinking is the longer they're on, the more they get hooked so ultimately we say to them, 'Look we can only subsidize you to this point.' Goodly enough of them will subscribe and it creates a business for us."
The six-month trial had previously been used in the U.S. but Larner says the idea had been in the works for some time and finalized after "getting the licensing in place" from the record labels and publishers in each country. Additional countries such as Brazil and Germany are soon to have a similar trial period, something Larner says is being worked on.
The CEO also says in terms of regions using Rdio he's been particularly surprised at Canada.
"Canada has over-performed to be quite honest with you," he says. "We made a concerted effort to get into Canada early when other services [like Spotify] had sort of ignored Canada. We've gotten some great response, had some great partners with Telus and others. So we're really pleased with Canada and we're excited now more people will be willing to try the service because of the extended free offering that we're providing."
After signing in -- and with no credit card information needed -- listeners will see a green measuring bar at the top which shows them how much usage they have left to use the free trial with no advertising visible. Users can subscribe to an unlimited web streaming service from Rdio for $4.99/month while a monthly fee of $9.99/month enables listeners to use the web and other mobile apps for unlimited streaming. Larner says the "listening meter" is consistent internationally and isn't exactly based on a duration of time or a certain number of songs.
"We haven't really disclosed it but it's based on consumption," he says. "Peoples' consumption habits differ meaning that one user may need 100 streams a month, 500 streams a month, 20 streams a month based on what they're used to listening to. And so we gauge the meter based on what we think their consumption habits are and based on their initial usage of the product and work on getting them to ultimately subscribe.
The issue of free streaming services has certainly garnered some criticism from artists but Larner says the idea of "free" has "sort of become table stakes." Rdio established a Artist Program which pays artists $10 for every subscriber they drive to the service which is being used by Canadian artists like Chromeo, Hedley and Yukon Blonde among others.
"You need some type of free offering to get people in the door so I think artists are used to that," Larner says. "If you're referring to artists and compensation, that's been an issue for probably the last year and change with regards to streaming services. And we acknowledge that at this level of scale not just for us but for all the services, artists are not receiving the compensation they expect to. But as we grow, and the revenue pie grows along with it. We pay the lions share of the money we make -- top line revenue -- to content owners."
News of Rdio's trial also comes after reports earlier this week where Deezer -- a competitor of Rdio in the music streaming sector -- announced expansion plans into Africa, the Middle East, Asia and Brazil. Larner says Rdio will expand into Asia and the bigger Latin America territories later this year with "designs on being a global service."
While having no ads on its platform during the trial might be challenging in terms of the bottom line, Larner says it's basically a variation of a theme.
"There are other services that are perpetually free but they have advertising," he says. "We sort of look at it as free is a way to get people in the door but ultimately what sells people is the product. And we feel we have the best product on the market. Once they're trying it, it's more about the product and less about the free."
Larner says Rdio will move into "connecting ourselves with live performances more and more" but don't expect a massive Rdio-sponsored music festival in the near future. And while he feels the company has done a good job on both the product and feature sides, he says Rdio's goal is to "keep at the forefront of product innovation," continuing to give updates and stay "ahead of the others in terms of innovation."
Rdio started in August, 2010 and founded by Janus Friis, one of the creators behind Skype.