Startup Cemetery

A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.

Rdio

Digital music service provider

General Information
Category
Music
Country
United States
Started
In 2008
Business Failure
Business Outcome
Bankruptcy
Closed
By 2015
Cause of Failure
Competition
Founders & Employees
Number of Founders
Three
Name of Founders
Carter Adamson, Janus Friis, Niklas Zennström
Number of Employees
Between 51 And 100
Funding
Number of Funding Rounds
6
Total Funding Amount
$125.7M
Number of Investors
5
Description

Rdio was among the first modern music streaming services to hit the American market. Rdio developers wanted to offer a product that was beautiful, flawless and social. One of the interesting features of that app was that it would show you what your friends were listening to and would give you music recommendations based on your circle of friends’ playlists.

Cause of Failure

Although Rdio developed an excellent product, its weakness was in the close to non-existent marketing and distribution department. The fact that they reached the market before Spotify, didn’t help them as they little momentum they initially had was completely lost once Spotify appeared on the scene.

For one, Spotify had an impressive marketing strategy and a business model that made it easier for them to gain more subscribers. While Rdio required users to become paying customers to listen to their streaming service, Spotify broke that entry barrier and offered free music thanks to the paid advertising it incorporated into its product.

Rdio tried a couple of pivoting strategies but these came too late and Spotify had already gained 75 million users (they surpassed 140 million in 2017, 50 million of which were paying subscribers). A mix of bad timing, reluctant leadership, and wrong priorities was what finally caused Rdio to go out of business.

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