Record labels have aggressively sued companies that fail to properly license songs, creating a major headache for entrepreneurs trying to build digital music companies. But Rdio, a licensed music-streaming service that competes with Rhapsody, is now offering its API for free to developers, hoping to encourage more innovation around music apps.

Todd Berman, vice president of engineering at Rdio, told CNET that the more apps that are built around the Rdio music platform, the more subscribers it will gain. The social-music service was launched by the founders of Skype, Joost, and Kazaa. It released its mobile API for iOS and Android this week at Google I/O.

Rdio's core business involves giving users access to high-quality songs on- and offline and a Twitter-like system that lets subscribers follow other people's tastes in music. Rdio subscribers can access music on a number of devices, including all types of computers, mobile phones, and in-home devices such as Sonos and Roku.

This is where Berman thinks developers come in: programmers can address user feature requests by creating apps outside of Rdio's main business. "Look at how Facebook's API allowed game developers to build onto their platform. Developers have access to our unique set of licensing terms that allow them to build applications on top of our platform," Berman said.

Developers can use the API for free, but the system isn't free for listeners, who only get a 30-second tease of music tracks. To hear the entire song, users have to subscribe to Rdio's service for $4.99. Developers get a percentage for every new customer they bring to Rdio and get a monthly recurring fee for the lifetime of the subscriber. They also get a cut of any downloaded songs. (No wonder Rdio opened its API to developers.)

"We are able to allow developers to receive licenses to build applications that couldn't be built before," he said. Rdio also pays music labels for every subscriber they have, but the bulk of the money goes to compensating artists.

Whether Rdio disrupts the music business, I'm sure we'll see cool apps soon. One developer is already working on a collaborative playlist so people in the same location can listen to the same jams and crowdsource the what they are in the mood for. I'm picturing a silent concert: Rdio users with smartphones standing in the middle of San Francisco's Union Square, listening to the same music--on their earbuds.

Rdio might be late to enter the subscription-based music business, but after releasing its Web playback API at South By Southwest and now letting loose its mobile API, the social-music service has a chance to catch up to more established players like Rhapsody and Pandora. If developers tap Rdio's API, expect to see more apps like Guess The Artist pop up.

Correction, 6:17 p.m. PT: This article was updated to indicate that developers do get a monthly recurring fee for the lifetime of subscriptions held by customers they bring to Rdio.