Failed Businesses – How Spotify Killed Rdio

Startup Case Studies: Rdio 

In today's case study, we identify other crucial mistakes Rdio made in their execution when compared to Spotify Rdio may have had a better product overall compared to Spotify, but they were completely outmaneuvered by Spotify in crucial areas like: Marketing and Pricing.

Animated Startup Case Study: How Rdio Lost to Spotify

A Classic Startup Case Study: Rdio

The competition in the music streaming industry is fierce! And with big names like Apple, Soundcloud and Spotify - it comes down to the survival of the fittest! Today we’ll talk about a beloved name that DIDN’T survive : RDIO

Rdio was one of the forerunners in the music streaming industry , and competed directly with SpotIfy. In fact, when comparing the two - Rdio was hailed to be the superior product. So why is it then - that Rdio is now a distant relic of the past, while Spotify is growing at an exponential rate! Let’s go over the top three reasons

Reason #1: Rdio Focused on Problems that Didn’t Exist

Rdio was far ahead of it’s competition. The product was praised for its minimalist and intuitive design ! In hindsight though, Rdio may been Over-Engineered.

Many of the features … were pretty inconsequential -- users didn’t even notice them. This was a HUGE waste of resources -- Resources that could have been allocated elsewhere -- like marketing for instance. This brings us to the next reason they failed.

Startup Case Studies - Rdio

Rdio User Interface

Reason #2 : Rdio Had Terrible Brand Awareness

A great product, with poor marketing. For the entire year of 2010, everyone was talking about Spotify while only a few even knew what Rdio was.

Startup Case Studies - Rdio

Rdio Billboard

Rdio had been in the market an entire YEAR at this point, & Spotify hadn’t even launched -- this was bizzare. You can’t help but ask -- where was the marketing?

Former Rdio employees claimed that although they was an excellent product ---- they had no marketing whatsoever. Spotify took advantage of this, and dominated Rdio in the market.

But Marketing isn’t the only place Rdio fell short -- their business model had a few cracks in it as well. This bring us to the final reason why Rdio failed.

Reason #3Rdio missed the Freemium Boat

At the time, Rdio only offered a paid version of their product.

Spotify, on the other hand, understood the Power of ‘Free’: Give away something for free, to create demand for something else.

Spotify offered their ad-based version for free to create demand for their PAID version. These customers, whom Spotify were able to win-over, didn’t even get a chance to try Rdio’s superior product.

Startup Case Studies - Rdio

Rdio vs Spotify Pricing Plan

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About the author

Krisha Aranha

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