Q&A: Rdio’s President of International, Scott Bagby

Following its expansion into 24 new countries last week, Rdio now offers a catalogue of around 35 million songs in 85 countries, making it the largest streaming service in the world in terms of territory dominance.

The company's President of International Scott Bagby sat down with TMNat Rdio's Sydney officesto discuss his plans to expand to 100 territories by the end of the year, Australia’s unique digital market, the ever-looming launches of Beats Music and YouTube Music Key and why Rdio won’t release subscriber numbers.

You just announced the expansion into 24 new territories.

We’re still expanding. It’s only January; we’ve got big plans for the rest of the year.

What have you got planned?

Because there’s third parties involved I don’t know how much I can say, but more countries, more countries. We hope to get to 100 by the end of the year. There’s only 15 left but you know, it’s a goal.

Rdio is the first global streaming service to launch in India, why has the territory been such a hard nut to crack?

A lot of them are tough. To launch in any market – and it is getting easier from a rights perspective – you have to get all the stars aligned. You needs artists and the rights holders so the record companies, they need a certain amount of money, you need the publishers and the songwriters, they need their money, and also [Rdio is] a company, we need money to keep the lights on and also maybe get a bit of a return for the investors. Then you have the consumer, they need to have it at a certain price that they want it. So lining all of those up, it’s not easy.

There’s different challenges in every single market. I think one of the biggest things that any of these companies face is global expansion […] We’ve always had a global focus and so my main point of coming in [in 2010], that was my thing. Australia was the third country, right after we did US, Canada, Brazil and then Australia.

One of our biggest challenges is to be global but also local. We’ve always had this multi-local approach. I think that’s one of the challenges but it’s also one of the things we do really well. You’ve seen our partnership with AIR and all the local labels and even Live Nation for example. We just expanded the Live Nation agreement here in Australia. That’s one thing that I’m actually really proud of, is taking that challenge of being a global but local [company]. I think that’s what other streaming services I think you’ll find it’s a varied entry. You have the players that you have right now but actually building up a company, if you’re not the Apples, Googles, Amazons of the world, if you’re just two kids in a garage, that’s challenging. So we’re glad to be one of the best services in the world in regards to product and reach.

Rdio CEO Anthony Bay recently listed Australia among Rdio’s Top 5 biggest markets; what do both of you think about our digital music market?

All digital markets are growing, and growing at a great pace. The stats just came out and we’re up 111%. I do think, and this is more on a global basis, that there is still room to improve on the education. Most of us know about streaming services and those of us within a half mile radius know about streaming services but you get away from the coast and the major cities, even in major cities, it’s not that well known […] I don’t think we’ve had that point, from a consumer behaviour perspective, where it’s like ‘yep, this is exactly what I want.’

Places like the Nordics, which has had streaming services for longer, something like 25% of the population is subscribed. That is the future and I think you’ll get there. Is Australia there yet? No. Is there an education that we want to get the consumer there? Yes. Does it have the potential? Easily. With the amount of artists and the kind of unique music that comes out, it’s amazing what you could do here. And with these global platforms, get it all the way out into other markets.

There’s been so much blow-back from artists and music fans about royalty payments from streaming services. Where do you feel Rdio’s responsibility lies in that argument?

Rdio is a firm believer in artist’s choice. It’s their music, it’s their property […] The way that our ad-supported Station’s First approach goes, is a lot like radio, and all artists love radio. We pay more to the artist than they would get on the radio.

[…] We don’t believe the artist has an issue with the paid side of the service, it’s the free stuff [they have an issue with]. For example Taylor Swift is still on Rdio. Spotify and YouTube you have an On Demand element, and [artists] don’t get paid that much. If you hear a song whenever you want, then there’s little incentive for a large part of the population not to go out and get into subscription service or buy the vinyl or whatever – that’s basically the artists’ issue. I think you’ll see some other artists won’t go in that way. Certain types of free, or ad-supported services are good. The radio business worldwide is I think three-to-four times the size of the music industry, so the radio business is huge and for artists to participate in that at a higher rate than they, through services like ours, becomes attractive.

I think giving artists’ music away music for free for very, very little money, on demand, is something that we don’t support. But actually having it in discovery and paying them well for when it does come up, is something they’ll embrace.

Australia is particularly over-saturated with 26 or 27 streaming services, and some just aren’t lasting. Do you think Australia can sustain that many?

I think you’re going to see some consolidation. I think it’s going to be very hard for 26 or 27 players to sustain. You’ve even had some of the bigger players pull out [Deezer, Songl], so you’re going to see more of that.

I don’t think Australia is a one winner takes all. I think you’re going to find people enjoy different streaming services just like they enjoy different record shops. You’ll find it’ll come down to personal taste on UI and UX [designs] and there will probably be some niche players where they really focus on certain parts. I think the good thing about Rdio, when they do get to the point of knowing the products on the market and they’re comparing product to product, I’ll back us any day of the week. You see it in independent reviews already.

Beats Music has been promising Australia its streaming service for over a year and YouTube Music Key should launch here soon, how do you think the services will fare in Australia?

Beats coming in, I don’t think is a bad thing for us, because it will actually increase awareness. But I do think there will be some consolidation for some of the other players.

YouTube is a strange one for me because the artists stay on it and it’s [currently] free. It kind of goes back to my whole other premise of artists’ choice. Also artists need education with streaming services and what’s going on, I think with it being new a lot of them have been blindsided in all the contracts with the rightsholders. I think we’re in a turbulent time for the industry. I think people just don’t understand it, and that happens when you have huge consumer shifts. I mean, you saw it when all of a sudden we went wireless, radio came out a long time ago and artists were like ‘what, you can’t play my music for free.’ Or when iTunes came up, and now they’re crying over lost iTunes revenue. I think it’s not only consumer education [that’s needed] but it’s also an artist relations and artist management education. And then when it all calms down, I think you will see that streaming in particular will help artists, independent artists especially because it’s a platform for global reach.

Will YouTube be a part of that if their business policies remain the same? I don’t know. I think you’ll have the legitimate gripes that artists have with not getting paid enough when all their songs are On Demand.

Anthony [Bay, CEO] brings up this point a lot too on why we don’t underestimate some of the big companies like Apple and Google: Google doesn’t charge its consumers. Do you ever pay Google for anything? No. YouTube coming in with a subscription service, is not something people are used to paying Google money for. So we’ll see what happens.

You were responsible for establishing Rdio outside the US and Canada, how did you find Australia’s independent labels when establishing those relationships?

The majors were a bit more difficult because for a small population, Australia punches above its weight in the music industry. I think in every given year it’s the fifth of sixth biggest market for us. So for the dominant players, the major labels, it becomes a bit scary.

The independent labels, the majority of them, were open to it. The last time I looked at the stats, independents, you know aggregators of indie music, represents over a third of our listening. So it’s a great opportunity for their artists.

Rdio hasn’t disclosed its subscription or user numbers, why is that?

We’re a privately held company and it’s a philosophy of the investors. They don’t see any need. I don’t think that if all of a sudden we expose our numbers and our growth will go through the roof.

We’re basically a product first company […] Now we’re working on a great free to consumer ad-supported product that’s curation. Even if you’re a very, very active listener, you get like, choice paralysis sometimes. Even the ones that know exactly what they want to play sometimes you want to be like ‘just play me something good, I don’t even want to think.’ That’s why people still listen to radio. Our Stations do just that.