Rdio raises $17.5M to boost music-streaming service

Social music-streaming service Rdio announced today it has raised $17.5 million as it expands to new platforms and regions.

Created last year by the founders of Skype, Joost and Kazaa — Janus Friis, Niklas Zennström (pictured) — Rdio hopes to blend social networking, internet radio, and music playback. If it succeeds, music-streaming services like Rdio (pronounced R-D-O) could shake up the music business, ending the buying of songs and albums individually in favor of subscriptions to a big library, much like Netflix has done with movies.

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The idea is to give users a seamless music experience, so they can listen to music on a computer, pause it, and pick up where they left off on a phone or other device. Users can see what their friends are listening to and exchange play lists. Radio-type sites such as Pandora or Last.fm play song genres you like but don’t let you choose specific songs or a specific play order. But on Rdio, you can listen to whole albums without interruption. The service launched last August.

The latest deal was led by Mangrove Capital Partners and included existing investors. Friis and Zennström originally funded the company through their technology investment group Atomico. The company has deals with major music labels, including Sony Music Entertainment, EMI Music and Warner Music Group. Subscribers to the service get unlimited access to its millions of songs for $4.99 on the desktop and $9.99 for the mobile service.

The company is based in San Francisco. Rivals will eventually include Apple, which bought the streaming music service Lala, and potentially Spotify. Other rivals are Rhapsody and Microsoft Zune. For now, Apple uses the individual song or album downloading model, where you pay for a song and download it to a computer, and requires that you manually manage take the music to other devices you want to listen to it on.

Kazaa, as well as Napster, helped bring down the traditional industry of music CDs.