Rdio has officially gone bust – owing serious money to music business rights-holders.
The US streaming company filed for Chapter 11 Bankruptcy on Monday (November 16) with the Northern District of California Court.
The details of the filing, obtained by MBW and which you can see below, make grim reading for music business rights-holders – especially Sony Music Entertainment.
Rdio had $190 million in secured debt plus around $30 million of unsecured debt before it filed for bankruptcy protection.
The secured debt was mainly owed to Pulser Media, which pumped funds into Rdio since 2008 and was a majority owner.
Yet it’s the $30m in unsecured debt that will most rankle the music business – not least the $2.4m Rdio owed to Sony Music Entertainment before it went under.
Below you can see the list of Rdio’s 20 biggest creditors from its Chapter 11 form (contact data redacted), republished by MBW.
As you’ll notice, compared to Sony, the other two major music companies get off relatively lightly: Rdio owed Warner Music Group $613,374 and Universal Music Group $294,219.
Rdio’s biggest creditors are partner and set-top box firm Roku Inc ($2.76m owed), Sony Music ($2.4m owed) and AEG-owned ticketing firm AXS Digital LLC ($1.25m owed).
Other creditors of interest to the music industry include Shazam ($1.17m owed), Tunecore ($236k owed) and Merlin BV ($134,960 owed) – the latter representing around 20,000 independent labels including Beggars Group, [PIAS] and Secretly Canadian.
Meanwhile, The Orchard – now a fully-owned Sony Music company – was owed $383,960. Added to Sony Music’s own credit, that means that Rdio could now get away with not paying the major a due $2.78m bill.
Here’s the big list:
Rdio’s Chapter 11 filing also reveals details of creditors owed less than the ‘top 20’ companies on its debt list (ie. less than $124,000 each).
A range of recognisable businesses and artists are owed cash, including:
- Arcade Fire
- CD Baby
- Cee Lo Green (who, along with Questlove and others, fronted an Rdio marketing campaign)
- Consolidated Independent (CI)
- Hits Magazine
- Isolation Network (INgrooves)
- Linkshare Corp
- Music KickUp
- Republic Of Music
- Roba Music Publishing
- Scissor Sisters
- Sun Entertainment
- The Presets
- The Source
- Universal McCann
Another angle on the story: the shocking state of Rdio’s fiscal health when it went under.
According to Rdio’s General Counsel Elliott Peters, who co-signed the Chapter 11 document with CEO Anthony Bay, the firm was bringing in $1.5m per month from its subscriptions business, plus $100,000 – $150,000 per month from its advertising business.
Yet The Hollywood Reporter reports that Rdio Inc was spending $4 million in monthly operating expenses, including payroll for 140 employees, plus royalty payments to rights owners and service maintenance costs.
The company’s monthly loss? Anywhere from $1.85 to $2.4 million, says THR, with Peters commenting in the Chapter 11 filing that Rdio “no longer has the economic means of funding such significant operating cash flow shortfall.”
Before filing for bankruptcy, Rdio pre-agreed a deal with Pandora to sell its former rival key assets for $75m.
These include technology and staff, but do not include subscriber data or licences with music rights-holders.Music Business Worldwide