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Shaw-Rdio deal a sign legacy media ready to embrace the stream

Brad Shaw, CEO of Shaw Communications, answers questions during a news conference at the Shaw AGM in Calgary, Alberta, January 14, 2014.

TODD KOROL/REUTERS

As streaming music services penetrate deeper into the public consciousness, telecom giant Shaw Communications Inc. is betting that Canadians will continue to rush to the cloud to get their music fix.

Shaw announced Thursday that it's formed a strategic partnership with San Francisco-based Rdio Inc., one of the leading streaming music services available in Canada, that will see the telecom company promote the service across its numerous platforms, plus partner for content.

The specifics of the partnership – such as how Shaw will promote Rdio, or how content will be shared – haven't been ironed out yet, a Shaw spokesperson said. But the move demonstrates the telecom's faith in streaming over the Internet as a key component of how people consume music, and will offer Rdio the chance to position itself as the market leader in Canada.

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Rdio lets users access more than 20 million songs online and through a mobile app with limited free memberships or paid, $10-a-month subscriptions. Fully-interactive services like Rdio, which let users listen to any music on demand, as well as playlist-oriented services like Songza and Pandora, have been making life difficult for traditional radio stations in recent years.

The International Federation of the Photographic Industry, which tracks music industry statistics, announced last month that subscription streaming services saw revenues jump 51 per cent in 2013.

While Shaw wouldn't clarify exactly what kind of offers would be available, it could mean discounted or free subscriptions or perhaps something more integrated, like an Rdio app for Shaw cable customers with Smart TVs.

Rdio is already considered to have one of the most user-friendly, social interfaces among global streaming leaders; offering a TV port would certainly boost its consumer base while giving Shaw an asset to brag about to its competitors.

"Our partnership with Rdio will develop great offers that will enable Shaw customers and everyone across the country to enjoy this service," chief executive Brad Shaw said in the Thursday press release.

It may be an even bigger play for Rdio. The small Canadian market has held back some services – namely Sweden's Spotify Ltd., widely accepted as the global streaming leader – from launching in the country. This has allowed others, like Rdio and France's Deezer, to take bigger market share in Canada than elsewhere.

Integrating Rdio into Shaw's offerings marks something of a reentry into the music game for the telecom company. In 1999, Shaw spun off its radio properties into Corus Entertainment, and the company stopped offering FM radio stations as part of their cable services two years ago.

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Services like Stingray Digital's Galaxie channels are available to Shaw cable customers, offering dozens of programmed music stations, but don't offer the ability to select specific songs and albums to play. That's where the fully-interactive Rdio comes in.

The financial terms of the partnership weren't disclosed, but in a further signal of confidence, Shaw also announced it had made an investment into Rdio's holding company, Pulser Media Inc. Rdio previously announced a similar partnership with the Brazil media conglomerate Grupo Bandeirantes.

Rdio's financial health came into question last year when it trimmed its staff by 35 employees, shuttering its small Canadian operation in the process. Partnering with a legacy media organization allows Rdio to flex its muscle in the streaming game in Canada, particularly against Deezer, which announced earlier this month that mobile listeners could now use their service for free, with ads, in Canada.

A spokesperson for Rdio did not return a request for comment before publication.

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