Spotify rival Rara.com is refusing to accept new subscribers as its owner tells MBW that if it can’t find a buyer, the platform will be closed.
Rara’s CEO, Jez Bell (pictured), has this week exited the business to join UK collection society PPL as its new Chief Licensing Officer.
Bell’s departure comes around three months after Omnifone brought Rara.com in-house and paid off the platform’s debt.
Rara was previously run by a separate management team, although it used Omnifone’s technology. Omnifone was also a shareholder.
Omnifone CEO Jeff Hughes told MBW today that Rara is now running at break-even and so will not “accumulate further debt”.
It can’t go on forever without a buyer, however – a deadline Hughes said would probably have to arrive in the next six to 12 months.
“We’re not currently taking on new customers at Rara. If we can’t find a buyer, eventually we’ll shut it down.”
“We are a B2B company – we have no interest in running a direct-to-consumer service,” said Hughes. “We have put a lot into Rara over the years. We have taken costs out to try and run it at a break-even level.”
He added: “We’ve streamlined Rara as much as we possibly can. We’re not currently taking on new customers and if we don’t find a buyer or someone who wants the assets, eventually we’ll shut it down.”
Rara, a fully licensed premium subscription platform, was launched in late 2011 boasting a catalogue of more than 20 million tracks.
Despite not allowing any more subscribers to join Rara for the foreseeable future, Hughes said that Omnifone would continue to service Rara’s “loyal” existing customer base.
What could potentially topple the service is its licences: Hughes said the platform was currently fully licensed by major rights-owners – but that he would never allow it to run it illegally.
“We have some time,” he said regarding Rara’s fate. “It’s not imminent that Rara will just stop working. We’ll look at whether or not we take on new customers in the future.”
Available in 31 countries including the UK, US, Canada, Germany and Australia, Rara attempted to take on the likes of Spotify with a mainstream-friendly proposition.
In May 2013, it launched an in-car streaming partnership with BMW across Europe, which it said was the first deal of its kind.
“Rara wasn’t able to raise enough money to compete – streaming is a big boys’ game and it was competing against some very well-funded companies.”
“While there’s no negative cash drain on the business, we’re certainly disappointed that Rara wasn’t able to make itself a big player in the streaming music world,” said Hughes.
“Had it achieved that, we’d have gotten significant revenue. We spent time, emotion and energy trying to make a great product – and I think we essentially did that. But the company wasn’t able to raise enough money to compete – streaming is a big boys’ game and Rara was competing against some very well-funded companies.”
Hughes called Jez Bell “a great guy”, who’d been “looking to leave” since Rara came in-house at Omnifone at the end of last year.
Hughes added that Omnifone was already talking to one company who are interested in buying Rara with “some really exciting plans” for its future.
“Omnifone isn’t the sort of the business that will ever be able to invest the money or the management time to make a direct-to-consumer service – that’s not us,” he commented.
“If someone was in the market to buy it, we would certainly sell. In the meantime, we’ve had to take steps to ensure that while we explore those opportunities, the service doesn’t cost us money.”
Omnifone recently lost the account for Sony Playstation’s music streaming product, with the video games company deciding to can its own platform – Music Unlimited – and instead adopt Spotify as a third-party partner.Music Business Worldwide