In an interesting development online music streaming site Dhingana which finally closed down mid last month has now been acquired by US-based music streaming website Rdio. The development was initially confirmed by Dhingana to Medianama.

With this development, Rdio, the online music streaming service that offers ad-supported free streaming service and ad-free subscription services in 35 countries across major mobile platforms, gets an experienced team to enter the Indian market. Additionally the site created by Skype founders Niklas Zennström and Janus Friis also gets an Indian user base to compete with the likes of the major players Gaana and Saavn.

Rdio plans to launch later this year and it is being said that both the founders of Dhingana – Snehal Shinde and Swapnil Shinde will be joining the Rdio team, where they will be responsible for Rdio’s expansion efforts in India as well as other emerging markets.

Dhingana’s shut down was inevitable from last year when it was reported that the service was struggling to monetize with the record labels hiking licensing costs. However, the company tried to play down the media stories. Dev Khare, a board member at Dhingana & Principal (India) at Lightspeed Venture Partners which had invested $7 mn in the company also avoided commenting on the development.

However, Neeraj Kalyan, President of T-Series, cleared the mist by stating that it was T-Series that was no more interested in renewing its license for nearly 8000 songs as it couldn’t see traction.

“T-Series has not renewed its license for Dhingana.com and T-Series’ music has been withdrawn from the site with immediate effect. We were not able to see much traction from this platform as compared to other similar services in India and abroad and thus decided to part ways in an amiable manner.”

With Rdio now acquiring Dhingana, will it be able to rework on the deal with T-Series? And with Hungama having the exclusive mobile rights for music in the country, life wouldn’t be easy for Rdio in the country where online streaming business had seen major jolts in 2013.

Speaking to TC, Kalyan had added that, “The streaming business has to slowly move from free economy to paid economy as sustainability of ad-supported revenue model is a big question mark. Free music is a very dangerous thing, and we would not like our next generation grow up believing music is for free.”

Rdio charging $9.99/month for unlimited streaming of songs across web and mobile devices might get a vote of confidence from Kalyan but the pricing will have to be adjusted according to the market competition. Operator billing for such services would be the next step in audience acceptance in the country.

Acquisition of Dhingana may not be the way how founders would have dreamed of but at the same time it would be interesting to see how Rdio will grow from here in the country at a time when globally music streaming business is largely struggling due to hefty royalty fees.