Online subscription music service Rdio plans to launch a free, ad-supported music service as part of a partnership with radio station operator Cumulus, according to The New York Times.
The deal, which is expected to be announced Monday, will give Rdio "broad access" to the terrestrial radio giant's programming to help it compete better with Spotify and Pandora and promote Rdio's service across Cumulus' 525 radio stations. In addition to providing content for Rdio users, Cumulus will sell advertising for Rdio's free, ad-supported version, which is expected to launch by the end of the year, the Times reported.
"This is our digital play," Cumulus CEO Lewis W. Dickey Jr. told the Times.
Many music services already offer free, ad-supported music services, but until now Rdio has charged $5 to $10 a month for access to its music library. With the move, Rdio is targeting Spotify and Pandora, which offer listeners an ad-supported option and then try to persuade them to upgrade to a paid subscription.
Although the content and services Cumulus is providing has an estimated value of $100 million, no cash will change hands as part of the deal. However, Cumulus will take a "significant equity stake" in Rdio parent company Pulser Media.