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Rdio expects rise in Brazilian users

The company places its bets on "freemium" model - but poor mobile internet services remain a challenge.

Music streaming service Rdio is hoping that its shift to the "freemium" model — free to use, with money coming from advertising — will help attract more Brazilian users.

The company has shifted from its previous free-trial model, where subscribers could listen to music for a limited period of time before having to pay for a subscription, to the free offer without time restrictions but with adverts — which represent Rdio's largest chunk of income.

Brazil is the third largest market for Rdio after the United States and Canada. The company's CEO Anthony Bay told local newspaper Folha de São Paulo that the move to the freemium model could well mean that Brazil would become Rdio's second market.

Rdio sees the rise in smartphone use in Brazil positively, Bay told Folha. On the other hand, the main local challenge for the company is the poor quality of mobile internet services in Brazil, which prompted the company to tweak to its platform to allow better performance.

With the change to the freemium model, Rdio adopts the same model as Spotify, which launched its streaming services in Brazil in May. Recently, Spotify executives have said that its free offer will result in a decline in music piracy in Brazil.

"People tend to do whatever is easier and cheaper. Our objective is to build a product that has the same cost of the pirated product — free — but easier and better," said Head of Spotify Labs, Gary Liu.