It’s all but confirmed that mobile phone company HTC will purchase on-demand streaming service MOG via their Beats Electronics high end headphone brand. Which is a very interesting play for the folks at MOG. That service, while interesting, might have been dismissed not very long ago as one that was getting sidelined by other on-demand services like Spotify and even long timer Rhapsody, which recently reinvigorated itself with the purchase of the legal remainder of Napster.
Following in the footsteps of the mobile phone/streaming service pairing between Muve and Cricket, this deal looks like a good one for MOG, which was founded by David Hyman in 2005 and had raised $33 million. MOG reportedly has about half a million users.
HTC, the fifth largest smartphone maker in the world, took a controlling stake in Beats last year. That company is tied in tightly with Universal Music, the largest of the big record labels, which adds yet another interesting twist to this deal.
So MOG, or whatever it becomes, will become an on-demand music source built into a large number of smartphones. Sure – those folks can still subscribe to Spotify or Rhapsody, but if HTC comes with a free service that offers the same thing why would they?
Rhapsody will acquire Napster from Best Buy and perhaps that will – once and for all – kill off the most notorious company name in online music. I for one am glad to see it go. Napster was launched in 1999 by Shawn Fanning and Sean Parker to promote illegal online sharing of music in the form of mp3’s. It was shut down in 2001, declared bankruptcy in 2002, was reborn as a commercial venture in 2003 and purchased by Best Buy in 2008. I always thought that was one of the worst decisions to buy a brand that a company ever made.
Now Rhapsody, in an effort to stay alive and compete with newer on-demand services like Spotify, will migrate Napster subscribers over to the Rhapsody platform where they will enjoy subscription based on-demand streaming, along with the ability to build playlists for offline listening, a feature that Rhapsody introduced earlier this year. Reportedly, Napster subscribers who were paying a cheaper, $5 a month fee will have to upgrade to Rhapsody’s $10 a month subscriber fee.
Rhapsody has 800,000 subscribers, about 15 million songs, and has been in business for about ten years. While they’re not huge, they are the largest on-demand subscription service. Best Buy paid $122 million for Napster in 2008 and will get a minority stake in Rhapsody in the transaction.
Napster openly and defiantly promoted illegal music sharing and caused a lot of animosity between labels and services, not to mention contributing to the “music is free on the Internet” mentality that is still pervasive today. There’s a real satisfaction in seeing one of the oldest names in online music finally put the brazen bull that caused so much damage out to pasture..
Music consumption is increasing, and this heat map clearly shows where and who has the traffic. In case you thought Pandora was the big boy, let the visual speak for itself – the real elephant in the room is YouTube. 31% of all videos on that site are music now, and it’s the number one music consumption destination on the web – at least according to this info based on data from Compete.
ITunes is not web based and therefore does not qualify for this comparison. Grooveshark, which has been growing audience faster than its been obtaining licenses from big labels, grew traffic 236% in 2010. By comparison, Pandora grew only 116%. Shoutcast grew 180%. AOL Music, Last.fm, Slacker and MOG all grew, as did rdio – by a whopping 3680%. But given that rdio just launched last year, that growth was from nothing to tiny, as the heat map reveals.
There are a lot of other sites on the map that aren’t so much streaming music platforms as they are music download sites, or artist communities, or other types of music platforms. It’s the best snapshot I’ve seen so far of the way that streaming music platforms stack up globally. You can get a better picture, along with mouse over data on each site, and a growth chart, here.
AT&T has launched a new mobile music platform that delivers “song and album downloads, streaming radio, song match, lyric search and an enhanced music player – into a single, cohesive experience for AT&T mobile phones.” AT&T will charge customers $6.99 a month on top of a data plan fee, with song and album purchases charged a la carte.
The service will extend streaming music capabilities to “quick messaging phones”, also sometimes called feature phones, or non-smartphones. It’s currently available on three popular devices – LG Xenon, Samsung Solstice and Samsung Impression. It will soon be available for downloads on other phones and AT&T will begin pre-loading it on new devices this summer.
AT&T has clearly identified streaming music as a popular application for mobile devices, and created this platform to offer customers who are not using smartphones those capabilities. I’m sure they’re hoping those customers will see a good reason to purchase unlimited data plans so they can stream.
Meanwhile, Nielsen recently reported that smartphones will overtake other mobile devices by the end of next year as more and more customers choose to upgrade. The use of Wi-Fi increases from 5% for feature phone owners to 50% for smartphone users because smartphones give users more ways to utilize a broadband connection. Now AT&T has created a platform that enables feature phone customers with some of those capabilities.
Meanwhile, it’s all a good thing for the growing Internet radio audience…