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Cumulus Takes Equity Stake In Rdio, Will Launch New Free Music Service

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UPDATED: The Cumulus and Rdio deal is now official and includes Cumulus taking a "significant equity stake" in Pulser Media, Rdio’s parent company, in exchange for exclusive content, media and on-air promotion over a five year period. 

Streaming music services like Rdio face a lot of difficulties from how to monetize to how to catch people's attention. Now Rdio is partnering with Cumulus, a network of terrestrial radio stations, to provide content, raise awareness and sell ads for an upcoming free, ad-supported version. This partnership is extremely important for Rdio but is also described as Cumulus' "digital play."

Rdio, a streaming music service backed in part by Skype, has used free streaming without ads for six month periods in the past to introduce the service to potential subscribers. According to Ben Sisario, writing for The New York Times, Rdio is now planning an ad-supported free version that will seek to monetize and make permanent what was previously a promotional offer.

Sisario spoke with the CEOs of both companies in a joint interview who say the official announcement will come today and that it is a no cash trade. A key part of the deal is that the 1500 ad sales agents of Cumulus, which currently has 525 radio stations, will sell ads for the free version of Rdio in the U.S.

Currently Rdio offers unlimited web streaming for $4.99 a month, unlimited web and mobile for $9.99 a month as well as various family packages. A free, ad-supported version would complete the picture.

Cumulus CEO Lewis Dickey told Sisario, "This is our digital play." He went on to describe their relationship with Clear Channel's iHeartRadio a "marriage of convenience" and the Rdio deal an opportunity to move beyond "just passively handing our streams over."

Cumulus will also provide content in the form of playlists and radio shows free of local details and promote Rdio on its stations.

Rdio CEO Drew Larner states, "The biggest challenge we face is really awareness." Promotions on Cumulus stations should help with changing that situation for Rdio.

Rdio has been busy this year including expanding to new countries, adding movie and tv streaming via Vdio and partnering with Live Nation.

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Hypebot Senior Contributor Clyde Smith (@fluxresearch/@crowdfundingm) also blogs at Flux Research and Crowdfunding For Musicians. To suggest topics for Hypebot, contact: clyde(at)fluxresearch(dot)com.

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