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Summary:

Rdio, the startup created by Skype founders Janus Friis and Niklas Zennström, hasn’t yet launched its music subscription service. But the company quietly introduced its iPhone app in the last day, giving beta testers early access.

Rdio, the still-shadowy music startup created by Skype/Kazaa/Joost founders Janus Friis and Niklas Zennström, hasn’t said much about its forthcoming subscription service. But the company’s iPhone app has already quietly appeared in the App Store, giving its small stable of beta testers access to ubiquitous, on-demand streaming music.

Unless you’ve got a private-beta account, though, Rdio’s app doesn’t do anything yet. The App Store’s description says it will provide “unlimited and unrestricted access to all the music,” with skip, pause and fast-forward capabilities as well as unlimited playlist functionality, including “collaborative playlists” and notifications. A small handful of user ratings don’t add much color.

Rdio appears poised to enter a five-way scrum for the all-you-can-eat music subscription market, with two incumbents, RealNetworks’ Rhapsody and Best Buy-owned Napster, facing renewed competition from startups MOG and Spotify. All have slightly different models. Rhapsody is the first to market in the U.S. with its mobile app, already on iPhones and coming soon to Android phones, while Napster’s app doesn’t yet offer on-demand streams. Spotify’s free desktop service is augmented by a premium paid version that includes a mobile component, but while its app has been approved, Spotify has delayed its launch in the U.S. And MOG is expected to add a mobile app during the first quarter of 2010, which will cost more than the $5/month desktop service it introduced earlier this month. (Meanwhile, MySpace Music — which recently acquired free streaming sites iLike and Imeem — may also be mulling a paid service, though few people would pay for such a thing; Apple, which now owns Lala.com, probably isn’t contemplating a subscription model.)

What will differentiate these subscription services? I see five primary factors: cost, library, user interface, free component and mobile app quality. Rhapsody acknowledges that its app could be improved — and some commenters on this post agree — while a still-small but apparently happy subset of Spotify’s mobile customers are enjoying on-the-go streams in Europe. The content libraries do vary, and have some surprising omissions, while the three startups’ fresh designs give them the upper hand over the incumbents in terms of user interface. (As far as that goes, Rdio hasn’t shown us much yet.)

Music customers have traditionally been lukewarm to the idea of music rental but larger trends suggest that the market may be primed for increased adoption of subscription services, with some geographies more ready than others. The most important battleground for paid services appears to be emerging in the mobile sphere, where consumers aren’t yet accustomed to getting free music. If their promises are to be believed, all five companies will have mobile services up and running within a few months, so the battle’s just beginning.

  1. [...] over the past several months, Napster has mostly spun its wheels, losing market share as new competitors have sprung [...]

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  2. [...] Rhapsody (owned by RealNetworks) and Best Buy-owned Napster, new entrant MOG, and forthcoming Rdio. As I’ve written before, the key differentiators will be cost, library, user interface, free [...]

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  3. [...] music subscription sector is getting crowded, especially with Spotify’s U.S. launch on the way, and MOG still has to prove itself in the [...]

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  4. [...] as a free product than a paid one. If it’s to be just another subscription service in a crowded field on this side of the pond, Spotify may have fumbled a potential early-mover advantage by holding out [...]

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  5. [...] fund. Atomico has already invested in seven companies from its second fund. These include startups such as online music service provider Rdio and Tariq Karim’s Jollicloud, a maker of netbook operating [...]

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  6. [...] proven themselves in the marketplace, yet new ones keep appearing — the latest being Rdio. Quiet since its existence was first revealed last October, the company co-founded and funded by serial [...]

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