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Rdio to pay artists $10 per new subscriber

Tuesday, 2 Oct 2012 | 12:03 AM ET

LOS ANGELES -- Music subscription service Rdio is looking to dispel the notion that streaming services underpay artists for their work. Starting Tuesday, it will start paying musicians $10 for every person they convince through social media to sign up for an Rdio plan.

The move is an attempt to attract users in a field that has seen tough competition from the likes of Sweden's Spotify and Rhapsody in the U.S.

Subscription music services are gaining in popularity. For $10 a month, they allow users to stream an unlimited number of songs on mobile devices. Users can select from millions of tracks, including those off the latest albums.

But some prominent artists like Adele and Coldplay have kept their newest work off the services for months because of fears that easy access will hurt album sales. Some artists have complained that the royalties per stream amount to just fractions of a penny per play.

Rdio CEO Drew Larner said the new bounty is a "win-win" for artists, fans, and the company itself.

"This hits the compensation issue, but also fan engagement as well," he said.

A few artists have signed up for the plan already, including Snoop Lion, the rapper-cum-Rastafarian formerly known as Snoop Dogg. Other artists getting involved from the get-go include Scissor Sisters, A-Trak, Chromeo and Brendan Benson.

Rdio is offering the deal to any artist who already has created an artist page on Rdio in any of the 14 countries where it is available, including the U.S., Canada, Brazil, Germany and Australia.

San Francisco-based Rdio was founded in 2010 by Janus Friis, one of the creators of Internet-based phone service Skype.