Pandora says it is acquiring technology and intellectual property from Rdio and will add new features to its Internet music streaming service by late next year.
The $75 million US cash deal depends on Rdio seeking bankruptcy protection and gaining court approval for the deal. Rdio will wind down its service.
It would be the second big purchase by Pandora following its agreement to buy ticket seller Ticketfly last month for $450 million US.
In recent days, Apple announced Beats Music streaming would cease at the end of November, while Microsoft announced the end to the streaming service that went along with the Zune, the player and would-be iPod competitor it stopped producing nearly four years ago.
CEO Brian McAndrews said Monday that Pandora wants to redefine itself. It's primarily a U.S. service today known for its Internet radio. McAndrews wants to make it a global operation, add live events and give users more control.
Services like Spotify that let you request specific songs typically cost $10 a month.
Pandora radio is free, with ads. There's a $5-a-month option that strips out ads.
The deal also follows steps the company has taken to repair its frayed relationship with the music industry. Earlier this month, it reached a direct licensing deal for songwriting rights with Sony/ATV, the largest music publisher in the world. It settled a lawsuit for $90 million last month over songs from before 1972. It also suspended a plan to use a South Dakota radio station to lower its royalty payments, and agreed to retroactive pay to artists.
A more collaborative relationship with music makers puts it in a stronger position to expand, McAndrews said.
Rdio was founded in 2010, according to its website, and operates in 86 countries.
Pandora Media Inc. shares rose three cents to $13.45 in after-hours trading.
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