Peter Kafka

Recent Posts by Peter Kafka

More Money for Digital Music? Sure: MOG Gets Another $10 Million.

Yup, there are still people who want to invest money in digital music plays, despite an absence of evidence that anyone can make it work.

Newest bettors: The VCs putting another $9.5 million into MOG, the subscription music service. Menlo Ventures, which participated in a $5 million round last summer, has re-upped. Balderton Capital, Benchmark’s European spinoff firm, is the new money.

PaidContent reported the funding earlier tonight, and I can confirm their report, as they like to say.

“We’re using [the money] to blow it out,” CEO David Hyman tells me. More specifically, that translates into prepping for a UK launch; building an API so that the service can integrate into gadgets like Internet-connected TVs and the Boxee Box; and working toward a mobile launch within the next few months. Mesa, the boutique bank that helped MOG raise earlier rounds, put this one together as well.

MOG relaunched to rave reviews last fall, and it’s at least priced right: $5 for all-you-can eat music. But it’s not mobile — yet — and that would seem to be a prerequisite for successful music subscription service.

Then again, there really haven’t been any successful music subscription services so far. Rhapsody has been a money loser for RealNetworks (RNWK) and Viacom (VIA), and they’re in the process of setting it loose. Napster staggered for years until Best Buy (BBY) bought it, and it has foundered there, too.

But Hyman insists that MOG will be different. He won’t release subscriber numbers. But he says that he’s been able to convert 17 percent of the people who use MOG’s free trial offer into paying customers.

It will be interesting to see what happens to those numbers once MOG goes mobile. That will push pricing up, but Hyman says he doesn’t know by how much. That will be dependent on new deals he strikes with the labels.

Meanwhile, Spotify has become the industry’s great white hope for a viable music service, and everyone who’s played with it loves it. But proof that many people are willing to pay for it is another matter, and the service has yet to work out deals with the big music labels that will let it open up shop in the U.S.

That said, Spotify’s fans really are ardent. The latest is Founders Fund’s Sean Parker, who has invested a new slug of money into the company.

TechCrunch reported the deal earlier this week, and speculated that it may have been  “a token amount to get Parker’s involvement in the company”. But I’m hearing, from multiple sources, that money went far beyond token status, and may be as much as $18 million.


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