A day after Pandora shook up the music streaming world by announcing it was buying “key assets” from the remains of on-demand streamer Rdio, we now know one reason why the Spotify and Apple Music competitor was forced into bankruptcy: It owes about $220 million to creditors, according to The Hollywood Reporter.
Most of that debt is owed to Pulser Media, the company which provided the majority of the company’s financing since Rdio began in 2008. Other significant creditors include set-top box manufacturer Roku ($2.7 million), Sony Music ($2.4 million), online ticketer AXS Digital ($1.25 million), and Shazam (nearly $1.2 million). As The Hollywood Reporter points out, it owed Facebook (nearly $500,000, for ad placement) almost as much as it owed Warner Music Group ($613,000), and more than Universal Music Group ($294,000), and independent music distributor Merlin BV ($134,960).
The on-demand music streamer, which charged $10 per month for a subscription, made about $1.5 million monthly from this revenue source. In addition to about $100,000 in monthly advertising expenditures, it had $4 million in monthly operating expenses inclusive of the salaries of its 140 person staff, royalty payments to rights owners, and “service maintenance costs.”
While Rdio didn’t announce subscription figures, the above numbers mean the streamer had about 150,000 monthly subscribers. Spotify (75 million, and 20 million paid) and Apple Music’s (15 million, 6.5 million paid) subscription numbers, in comparison, make Rdio’s seem pretty paltry.
Rdio general counsel Elliot Peters made the streamer’s financial position pretty clear, stating to The Hollywood Reporter that the streamer “no longer has the economic means of funding such significant operating cash flow shortfall.”
Late last year, Rdio hired investment bank Moelis & Company to raise more financing “but ultimately realized it wouldn’t be possible,” according to The Hollywood Reporter.
As we reported yesterday, Pandora ended up spending $75 million to buy some of its assets contingent on the company’s Chapter 11 bankruptcy filing.
“We are defining the next chapter of Pandora’s growth story,” said Pandora CEO Brian McAndrews in a statement. “Adding live music experiences through Ticketfly was a transformative step. Adding Rdio’s impressive technology and talented people will fast-track new dimensions and enhancements to our service. I couldn’t be more optimistic about Pandora’s future and the future of music.”