After enduring a round of layoffs last month, Rdio, the streaming music startup from Skype co-founder Janus Friis, has found a new CEO, Anthony Bay. Bay, whose experience includes executive positions at Amazon, Microsoft and Apple, inherits the challenge of making Rdio profitable as it competes against market leaders like Spotify.
Margins in the streaming music business are extremely tight and Rdio, which lacks the music industry connections Spotify has formed, may be struggling to get enough paying subscribers to stay afloat (the company has not disclosed the size of its current user base). Rdio did not say how many employees were fired last month, but we were told by one person that the layoffs affected 35 people, while another tip said that the number amounted from about one-fifth to one-third of Rdio’s workforce, with the biggest cuts in engineering.
A representative for the company told us that the layoffs were to “improve its cost structure and ensure a scalable business model for the long-term.” It’s unclear how Vdio, the startup’s video-streaming service, has been affected.
Another potentially worrying sign is that the startup has not released any user numbers in a while. In contrast, Deezer reported earlier in November that it had passed the 5 million user mark, despite not entering the U.S. market. Spotify, which reported 6 million paying users in March 2013, announced today that it is opening up its analytics to musicians and managers. Rdio did tell TechCrunch, however, that it tripled the number of new users since the end of 2012, and 90% of those subscribers are now on the Rdio Unlimited tier, which costs $9.99 per month.
Bay was formerly head of Amazon’s global video business, and also served as chairman at Loudeye, where he led its B2B digital media content division before it was sold to Nokia. At Microsoft, Bay was in charge of the company’s e-commerce technology platform, as well as developing Windows Media Technologies, including Windows Media Player. He also worked eight years at Apple, where he led Apple’s Online Services.
Bay follows Drew Larner, who is now Rdio’s vice chairman and strategic advisor to its board of directors. Larner announced earlier this year he planned to vacate the CEO post.
Friis said in a statement that Rdio now plans to focus on growing its paying user base globally and added that Bay will “play a critical role in unlocking the value of our global terrestrial radio partnerships.” Rdio announced a strategic partnership with Cumulus Media, which operates 525 radio stations in the U.S., in September. The deal gives Rdio access to Cumulus’ programming, as well as promotions on its stations. In return, Cumulus, which took an equity stake in Rdio’s parent company Pulser Media, now has an online platform.
To date, Rdio has raised $17.5 million from Atomico, Mangrove, Janus Friis and Skype.