MOG SPINS OFF MUSIC STREAMING MUSIC SERVICE TO BEATS ELECTRONICS

Earlier this year rumors surfaced that MOG’s streaming music service was up for sale. News broke yesterday that a transaction between MOG and Beats, the high-end headphone company owned by Dr. Dre and chairman/CEO of Interscope Geffen A&M Jimmy Iovine, had been completed.

MOG’s music streaming service competes with the likes of Spotify, Napster and Rdio but never seemed to gain much traction despite having a larger music library and better payout rates than Spotify, the leader in the field. MOG’s advertising arm — the MOG Music Network, a very successful entity that predated the streaming service and has served as their main revenue generator — will remain independently owned and operated while all 48 of MOG’s streaming service employees will reportedly stay on under the new ownership, including founder and CEO David Hyman.

Terms of the deal have not yet been disclosed, but rumors suggest Beats paid just $10 million for MOG, which has 500,000 subscribers.

I’m not sure what to make of this news. The low sales price suggests MOG was far from profitable. I’d point to their label and artist payouts, which are much higher than Spotify’s; maybe they were unrealistic. Maybe they had poor ad sales (hard to imagine, given part of their company was a huge ad network). Maybe they had poor management. Maybe they just decided they couldn’t compete with the hype and fervor for Spotify. Tough to know.

In any case, we’ll see what this means for the future of MOG: it’s a good service that deserves a genuine shot. But it’s tough to see how at this point MOG can compete with Spotify, which has captured the public’s imagination.

Full disclosure: MetalSucks works with MOG’s advertising division on certain ad campaigns.

-VN