Wired: MOG’s $5 Per Month Music Service Highlights Spotify Obstacle

By Eliot Van Buskirk

The social music network MOG, one of our ten hottest music sites last year, has signed deals with all four major labels and indie aggregators to launch an unlimited on-demand streaming service that will cost $5 per month starting Thanksgiving Day, November 26.

We first caught wind of this plan last December, when the company’s CEO David Hyman gave us a sneak preview. Back then, the plan was to offer this as a free, ad-supported service, but Hyman says that is not possible due to the high cost of licensing on-demand music for the United States.

“We were exploring that model, but ultimately, that model doesn’t work,” Hyman told Wired.com. “That’s not limited to MOG — that’s for every company… none of these labels are doing it at a price point where you can offset it with ad dollars. It’s very simple economics.”

What about Spotify, we asked? “Even with an upsell to subscriptions, you just can’t make it work,” he responded. “The rates are too high.”

TunesBag’s Hansjörg Posch, who has also spent time wrangling licenses for a service launching later this month that will be crippled in the U.S., agreed that Spotify will face licensing problems here. “It’s rather not possible to launch an ad-supported, on-demand service in the States,” he said. “The business model just doesn’t work.”

Even worse for Spotify’s chances of launching an uncrippled free version in the United States (as it did earlier this year in Europe), Hyman — who has spent the last year or so negotiating with the labels — says some of them are now refusing to license any free, ad-supported music service whatsoever — be it MOG, Spotify, or any other company.

Spotify did not immediately respond to late queries for comment about that, or about when it now plans to launch in this country. (Elsewhere, Spotify co-founder Daniel Ek admitted that the launch could slip to early next year, and that the the U.S. version of the service might not be identical to the European version — it’s likely that he’s running into the same unmanageably high licensing rates or outright refusals that Hyman encountered.)

Given those licensing rates, the MOG All Access subscription, currently available as a closed beta, will cost $5 per month for streaming (and eventually mobile) access to a five-million-song-and-growing catalog. The company’s licenses will also allow all 700 or so of its official bloggers to post songs from the entire catalog for anyone to listen to, even if they’re not paying for the premium account, which could draw more traffic to MOG’s blogs.

Napster also charges $5 for on-demand streaming access to millions of songs, but Hyman says MOG’s “better on-demand [technology], better discovery features [such as MOG’s interactive radio], and better and sharing tools” will help it surpass that service. MOG currently boasts 8.5 million unique visitors per month, and plans to offer a free trial of the service that doesn’t require users to enter credit card information beforehand when MOG All Access becomes available to the public on November 26.

As for Spotify, its prospects for launching a free, ad-supported, uncrippled version in the states like the ones our European friends enjoy are decidedly murkier.


Posted by Ted • Wednesday, October 14, 2009 .