Layoffs Hit Rdio: Will the Music Stop?

There are no shortage of music streaming sites and services—there are so many that it’s difficult to choose which one is best for you. While competition is undoubtedly good for consumers, it’s not always so great for the businesses themselves, especially in a market as crowded as music streaming and one with such a slippery model for money-making. One such business, Rdio, seems to have become a victim of the business’s uncertainties, having just been forced to make some big layoffs.

The news comes by way of a post on TechCrunch, which cites sources who claim that between one-fifth and one-third of the company’s work force has been let go as part of the layoffs, with one source claiming that 35 people have lost their jobs.

A spokesperson with Rdio offered a broad statement regarding the layoffs:

“Rdio confirmed making across-the-board workforce reductions today to improve its cost structure and ensure a scalable business model for the long-term.”

The post also relays a statement from Rdio regarding the company’s current state of business, none of which offers anything resembling hard numbers about subscribers or revenues. Among the claims made by Rdio about its business is that the company has “tripled our number of new users” since late 2012, and that “90% of our subscribers are now on the Rdio Unlimited tier” which costs $9.99 per month.

As to what these layoffs signify is anybody’s guess. Typically, laying off staffers is seen as a sign of financial troubles, but there are plenty of examples when that’s not the case. By way of example, an up-and-coming new media company I’ve worked with for a few years—which you might be able to guess from my author bio, but who I will otherwise decline to mention by name—laid off a bunch of people last year in the name of streamlining the business. Lots of super-competent, seemingly secure employees were laid off…and the company was making money hand over fist and getting investment funds from the likes of Google.

So why the layoffs? The story I was told was that the company was looking to make its operations lean and mean so it could attract even more investment, despite revenues and traffic continuing to go up. Whether that was indeed the case is anybody’s guess. The company just recently had another, smaller round of layoffs, and I see nothing but good news about its financial and cultural capital fortunes.

In short, Rdio may be going through some turmoil in what’s been a tricky business to monetize and make profitable. Or, it may simply be trimming down in order to invite more investors or a possible buyer. One thing’s for sure: a bunch of people have lost their jobs, and that always sucks. Best of luck to all those affected by the cuts.