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Rdio Offers Free Online Music as Spotify Rivalry Intensifies

Rdio Inc., the online music service started by a founder of Skype Technologies SA, will offer free song streaming without advertising as the service battles Spotify Ltd. and Pandora Media Inc. for customers.

Users of the free service are granted a limited amount of music each month and access is available only for listening on computers, San Francisco-based Rdio said in an e-mail statement. That’s in contrast to Rdio’s subscription plans, which provide access from smartphones and other mobile devices.

Rdio is offering a free service without commercials as competition for listeners intensifies with Spotify, Pandora and Mog Inc. Pandora and Spotify offer advertising-supported free music services. Rdio aims to convert free users into subscribers to its unlimited desktop and mobile-music plans that cost $5 to $10 a month.

“Free music with no ads is very distinct from what everyone else is doing,” Drew Larner, chief executive officer of Rdio, said in an interview. “We know when people use Rdio they get hooked. That’s the bet we are making.”

Rdio, pronounced “Ar-dee-O,” was started in August 2010 by Skype co-founder Janus Friis, and it has a library of 12 million songs.

Free-access users will see a customized meter at the top of their profile page indicating how much free music they have each month, Rdio said in the statement.

Not Cheap

The amount of music available will depend on a number of factors, including monthly use, Lerner said. The free service won’t come cheap for Rdio, which must compensate record labels and artists for their music. The free service will be available for “a significant amount of time,” he said.

“We believe content is valuable, and that ultimately people should have to pay,” Larner said. “We’ll pay money out the door to the labels but we think we can get enough conversions to strike the right balance.”

Rdio users will be able to share music through social networks including Facebook Inc. and Twitter Inc., the company said. Rdio, Mog and Spotify announced an integration with Facebook last month that allows the social network’s users to share, post and talk about music.

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