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Music Streaming Startup Rdio Lays Off Staff To ‘Improve Cost Structure And Ensure A Scalable Business”

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The music streaming business can be tough, with market leaders like Spotify growing like weeds but still loss-making. Today, some bad news from competitor Rdio, the music streaming service startup from Skype co-founder Janus Friis. The company has confirmed to TechCrunch that it is laying people off.

“Rdio confirmed making across-the-board workforce reductions today to improve its cost structure and ensure a scalable business model for the long-term,” a spokesperson said today.

The company did not offer any further specifics on the layoffs. One person who first alerted us to them alleges that they affect 35 people. We have had other tips that say this works out to between one-fifth and one-third of the workforce, with significant cuts in engineering.

Indeed, at least two people affected by the layoffs are both engineers that focus on mobile and web apps, according to notes posted on Twitter. We’ve reached out to both of these people. Neither wanted to comment on the matter.

It’s not clear how and if Vdio, the startup’s video-streaming service launched earlier this year, will be impacted.

We have reached out to others at Rdio and elsewhere to see if we can get more details on what the story is behind this. But it’s notable that the company has not released any user numbers in a while. As a point of comparison, earlier this month Deezer reported passing the 5 million mark for paying users — and that’s without any entry into the U.S. market. Spotify last reported 6 million paying users in March 2013.

In a response to a question on how the company is doing, Rdio provided me with the following statement:

“We are not releasing any numbers at the moment, but we’re thrilled with the traction we’ve seen so far. Since the end of last year (2012) we’ve tripled our number of new users. Also, 90% of our subscribers are now on the Rdio Unlimited tier ($9.99/month) giving them access to Rdio not just on the Web but also through their mobile phone. Our strategic partnerships, and integrations with Facebook, Twitter, and Shazam have all contributed to our continued growth and we’re excited about what’s to come for Rdio in the future.”

Take that as you will, the company has definitely had some other knocks at the senior level. Earlier this year, CEO Drew Larner said he would be leaving his role as CEO, staying on as executive chairman. But in fact he is still there while the company looks for a replacement. “Drew is presently the CEO at Rdio and he is playing an active part in finding the new CEO before he steps aside. We’ll let you know as soon as we have more detail on the new CEO/the announcement,” an Rdio spokesperson told me today.

Before this, there have been others who have left the company, such as Todd Berman, Rdio’s first VP of engineering, who stepped down in March of this year. He has joined Malthe Sigurdsson, another Rdio departee who had been its VP of Product, at The Factory, an incubator also backed by Friis that is apparently gearing up to release its first products very soon.

To date, Rdio has raised $17.5 million from Atomico, Mangrove, Janus Friis and Skype. It’s unclear whether that makes Microsoft a shareholder in the company today.