Rdio launches cheap streaming-music tier...just like Rhapsody

Rdio unveils a $3.99-a-month plan that gives you infinite skips on Pandora-like radio stations plus 25 on-demand songs of your choosing. In other words: a riff on Rhapsody UnRadio.

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Joan E. Solsman
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Rdio is adding a midpriced level of service, joining its free Pandora-like option and the standard $9.99-a-month subscription. Rdio

Haven't we heard this tune before?

Streaming music service Rdio unveiled a $3.99 level Thursday as a cheaper but also more limited alternative to the $9.99 all-you-can-eat subscriptions standard in the industry. (In Australia, those prices are AU$5.99 and AU$11.99.)

If that sounds familiar, Rhapsody launched a similar service nearly a year ago, UnRadio. Both Rdio Select, as the new tier is called, and Rhapsody UnRadio let subscribers listen to Pandora-like radio stations with unlimited skips and no ads, and both offer an allotment of 25 songs that members can select to listen to whenever they like.

The moves illustrate a conundrum for smaller players in the burgeoning streaming-music market, like Rdio and Rhapsody. They must differentiate their products to compete against bigger rivals like Pandora, Spotify and -- expected in June -- a new subscriptions service from Apple based on its acquisition of Beats Music. But all music services are constrained by what rights holders like the music labels will allow. Though labels have grown more experimental in how they license music as streaming gains in popularity versus downloads, they're still risk-averse after the downfall of the CD shrank global music revenue by nearly half.

Rdio Select and Rhapsody UnRadio vary in some details. Pricing is the most significant difference: Rdio Select is $3.99/AU$5.99 a month. When UnRadio launched with mobile carrier T-Mobile as its partner, it was $4.99 a month for the public at large, $3.99 for T-Mobile customers and free for people on T-Mobile's unlimited data plan.

Nuances in the 25 on-demand songs also separate the two. Rdio's offering is simpler: You can download 25 tracks of your choice to hear them whenever you want, and you can swap out songs for a new selection of 25 titles once a day. UnRadio makes it a little trickier to listen on-demand with a mobile device. The service lets you favorite 25 specific tracks, which you can then play anytime. But you can't search by track name or favorite a song on your mobile device. (You can set up your 25 favorites by searching and selecting online in a Web browser on, for example, a laptop or desktop computer.)

Rdio Select enhances the company's competitiveness, and there's nothing wrong with that. The $3.99/AU$5.99 option provides the company with a good complement to its free and $9.99/AU$11.99 offerings, so it can appeal to a broader swath of people whose willingness to spend varies. But the similarities to UnRadio strain Rdio's description of the new offering as a "first-of-its-kind" service.

In a statement, Rdio said its Select service lets you download songs to your collection no matter where you find them -- in a station, in new releases, shared from a friend, via an app like Shazam, etc. "This true on-demand capability is what makes the tier unique relative to other similarly-priced products," the company said.

Meanwhile, UnRadio hasn't been a game-changer for Rhapsody. The company credited its partnership with T-Mobile for helping lift its total subscribers to 2 million, about a month and a half after UnRadio launched. That was up from 1.7 million three months earlier. However, it's a far cry from Spotify's 10 million paid members at the time.

Spotify now has 15 million paying subscribers; Rhapsody hasn't disclosed an updated subscriber number. Rdio doesn't disclose its membership ranks.

Rdio is offering a a 60-day free trial for Select, which is available in the U.S., Canada, Australia, New Zealand, India and South Africa, with additional countries to come. It works on Apple's iOS and Google's Android mobile operating systems, plus other connected devices like Chromecast, Roku, and Sonos.

Updated at 6:06 p.m. PT: With statement from Rdio.