Posted by Mark Mulligan on February 26, 2010
US music subscription service MOG is set to launch in the UKby the end of the 2nd quarter off the back of a 2nd round of investment totaling $10 million.
As I posted earlier in the month, the music subscriptions space is going through an important period of transition. It took much of the last decade to realize that the 9.99 premium rentals model was only ever going to appeal to a niche of music aficionados, and though global premium music subscribers total 8.25 million, we’re still no closer to mass market appeal for premium subscriptions. And yet we have a host of new entrants including, MOG, Spotify Premium, We7 Premium, Sky Songs, Virgin Media etc etc.
So what’s changed? Well, both a little and a lot.
The niche audience is getting bigger. Firstly, the appeal for premium subscriptions is still a niche addressable audience of tech savvy music aficionados, but that audience is growing. It’s still far from mass market (and never will be) but it’s a more attractively scaled base now. A few million per major music market perhaps. For a company like MOG that’s plenty enough addressable market. Also improvements in consumer technology and connectivity make it easier to deliver a high quality on-the-go cloud based experience, a crucial asset.
New routes to market. Perhaps the most important change though is that numerous new channel partners are emerging that can help shoulder the to-consumer cost. ISPs, mobile operators, device manufacturers, even brands all are becoming realistic partners for subsidizing premium subscriptions, in turn reducing the price point to an extent where appeal is much broader. The music industry is waking up to the fact that a recurring household music purchasing relationship is much more valuable and secure than ad hoc individual spending and illegal downloading.
MOG has an additional crucial asset: the service is inherently social. Regular readers will recall that I posted about the concept of 'putting the crowd in the cloud', that social interconnectivity in cloud based services will become a crucial component of music discovery and engagement. MOG joins those dots.
Those assets alone though may not be enough. If MOG is to steal serious market share in the UK it will do well to investigate the unique range telco partnership opportunities that the UK presents due to the government’s strong(ish) stance on making telcos partners in tackling music piracy. A subsidized MOG service from BT, integrated into their IPTV boxes and xBoxes, for example, would be a really enticing prospect.
(And a sign of the times, MOG is being talked about as a potential 'Spotify-killer'....whatever happened to being an 'iTunes-killer'...they're still the ones that own three quarters of the premium digital music business...)