Microsoft looking to acquire Rdio for integration into its Xbox Music service?

Xbox Music to be improved with Rdio?

Microsoft may well be looking to purchase Rdio, if what sources informing The Next Web is accurate. According to their report, Microsoft is currently in talks to acquire the San Francisco-based digital music streaming service, which would suit both companies should a deal be eventually made.

The Next Web has reached out to both Rdio ( and Microsoft, but were unable to dig further through contacts, receiving stereotypical responses. Rdio CEO Drew Larner informed the news website that there is currently nothing to discuss and he will not be commenting on rumours. Microsoft is busy looking to rebrand Zune and include it under its Xbox umbrella of products and services.

The Xbox range of services will consist of the console, as well video and of music. It would make sense for the company to look at Rdio for many reasons, which have been covered in The Next Web's report. Without diving into too much detail surrounding the explanation of reasons that would make such a deal sound like a promising prospect, it can be summed up as: Microsoft has many connections with Rdio. More on this later.

The software giant is transforming Xbox into not only a gaming platform, but a fully featured entertainment service. Microsoft revealed Xbox Music at E3 earlier this year, which will be introduced later this fall, along with a new Office suite, Windows 8 and Windows Phone 8. The service is likely to include free, ad-supported music streaming, as well as a subscription-based model like what we see today in Zune (minus the free streaming).

Music will become the central focus for Microsoft with its Windows 8 and Windows Phone platforms. The desktop OS will also be loaded onto tablets, including the Surface, that consumers will likely load and enjoy a wide variety of multimedia - including music.

So how would Rdio fit into the equation?

The potential purchase of Rdio

The ad-free music subscription service (think Spotify) has been available since 2010 in markets including Australia, Brazil, Canada, Denmark, France, Finland, Germany, Norway, Portugal,  Spain,Sweden, the UK, and the US. Rdio can be accessed via the web, as well as desktop apps for Mac and Windows, and apps for Android, Blackberry, iOS and Windows Phone. 

With a catalogue of tracks sporting over 18 million entries in just two years, Rdio has established itself as a serious contender with the competition, but is struggling to keep up with fast-evolving Spotify on the global battlefield. Should it reach an agreement with (or be acquired by) Microsoft, it could be the break it needs to push forward with innovation and market penetration.

We mentioned earlier that Microsoft has ties with Rdio. This is due to a number of personnel at Rdio previously heading up Skype, which (as you well know) is now owned by Microsoft. The Next Web lists a number of names who have have either held or still hold ties to Skype. Take Janus Friis and Niklas Zennstrom for example, who started up Rdio. These two Scandinavian entrepreneurs famously started up Skype, as well as Kazaa and Joost. 

To make it more of an awkward entanglement, Skype is an investor in Rdio, which is joined by venture capital firm Atomico, founded by Skype co-founder Niklas Zennstorm. Mangrove Capital Partners is also invested in Rdio, who was also one of the early backers of Skype. That's only naming a few. There's a number of close relations between companies involved, which could push for a potential acquisition.

As well Rdio, The Next Web also notes that Microsoft may also be interested in Vdio, a video streaming service (similar to Netflix) that Rdio has in the works, to boost rumoured Xbox Video. Of course, this is all rumour and speculation, but should the deal go ahead between Rdio and Microsoft, we could see an improved Xbox Music be available to consumers.

What would you make of an acquisition? Let us know your thoughts in the comments.

Source: The Next Web

Rich Edmonds
Senior Editor, PC Build

Rich Edmonds was formerly a Senior Editor of PC hardware at Windows Central, covering everything related to PC components and NAS. He's been involved in technology for more than a decade and knows a thing or two about the magic inside a PC chassis. You can follow him on Twitter at @RichEdmonds.