Pandora has agreed to acquire key assets from Rdio, a streaming music service that competes with Spotify and similar products, for roughly $75 million in cash.
That’s more than $50 million less than Rdio raised across six rounds of venture financing, according to Crunchbase. Pandora said in a press release that the final figure might change because it’s subject to “certain purchase price adjustments.”
Pandora will acquire Rdio’s technology and talent but not the operating business — which means the Internet radio company won’t be delving into the on-demand streaming business the moment it acquires the portions of Rdio that interest it.
Instead, the company said it plans to “offer an expanded listening experience by late 2016” depending on its ability to “obtain proper licenses.” Pandora, in other words, will give itself some time to assimilate Rdio before it takes on Spotify. (Rdio said it’s service won’t be affected today, but will offer updates on the status in the near future.)
On an investors call following the announcement, Pandora CEO Brian McAndrews said the company opted to purchase Rdio’s assets rather than building it from scratch because Pandora had already determined that it’s strategy was to eventually offer an on-demand component. As such, buying the assets allow Pandora to move quicker, he added.
The deal is a further sign of consolidation in the music streaming market. Apple spent $3 billion on Beats last year, and is shutting down the Beats Music service at the end of the month. Grooveshark, another streaming service, closed in April.
Yet the streaming music market will remain crowded despite that consolidation. Spotify, Apple Music, Amazon Prime Music, Google Play Music, Deezer, Tidal, and other services will continue to vie for attention in this oversaturated space.
This is the second major acquisition for Pandora in the last few months, with the first being a $450 million purchase of ticketing business Ticketfly. Between Ticketfly and the presumably soon-to-launch on-demand component of Pandora, hopefully it’ll be enough to keep it competitive with the slew of rivals.
Investors, however, don’t seem to be very impressed by the development, as Pandora’s stock is essentially flat slightly in after hours trading.