MOG Steps Up From Blogs to Subscription Music Service – Licensing Prowess as Important As Tech

By Mike McGuire | October 14, 2009 | 0 Comments

With today’s introduction, MOG’s All Access service, at $5/month for full interactive-stream access (pick any song, any artist in the catalog and stream the songs without playback restrictions), establishes a new price point for subscription services. While the service won’t actually be available until sometime in November 2009, it will have more than five million tracks from all four major labels and the top independent labels.  The company is also planning to develop mobile phone apps to extend the service into a hot category established by the iPhone applications of (kind of) competitors Slacker and Pandora.

Discussions with MOG’s David Hyman, and some demos of the service,  leave me thinking that one thing Hyman and crew have to be recognized for is their willingness, or perverse stubbornness, to engage in extended negotiations with the labels (and publishers)  to obtain favorable license terms. These terms translated into the fully interactive streaming and playlist creation capabilities – functionality many consumers associate with more expensive Rhapsody and Napster services.

As we’ve noted in multiple notes and presentations, licensing content (by services from rightsholders) is a bigger challenge than any particular technology issue, and Hyman did nothing to dispute in that in our discussions. Hyman is no newbie when it comes to dealing with the labels given his time at Gracenote and SonicNet. That said, All Access is going to hit the market at roughly the same time Rhapsody and Napster (owned by BestBuy) will still be plugging away  but their subscriber numbers have either hit a plateau or dropped. But they continue to invest as apster just announced a deal with Dell to preload the Napster software on select Dell PCs and provide a year’s worth of free streaming and 60 free MP3 downloads, and Rhapsody has announced an iPhone application that lets existing subscribers extend their access to the iPhone. All Access will hear the footsteps of Europe’s favorite music service, Spotify, which is supposed to launch in the U.S. sometime in 2010.

What MOG’s going to be able to leverage is the nine-plus-million monthly visitors (counted in October, according to Quantcast) to MOG’s blogging network, started in 2006. Much of the MOG blogging network’s appeal is the nearly constant flow of reviews, thoughts and observations about music – the sort of information one would expect to see on a site devoted to music geeks who treat the interest with the kind of enthusiasm one typically sees with (some) sports fans.  If All Access can use the MOG network as a customer acquisition tool (without harming its inherent appeal to the bloggers and readers), one can imagine that incumbent music subscription services will be scrambling to survive.

What’s really likely to happen, though, is the favorable terms MOG was able to obtain will quickly be replicated by others. At that point, it will all be about the type of experience MOG can deliver that will differentiate it from the competition. But until I can get my hands on a demo account for All Access, we’ll have to wait and see.

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