Join the Club: MOG Wants More Money for Digital Music, Too
Digital music service MOG, which raised $10 million a year ago and $15 million altogether, wants more. It’s out trying to put together a funding round of $25 million to $30 million.
Nothing new there: Everyone is raising money–lots of money–for digital music services. Again. Even though the industry’s track record for the last decade has ranged from uninspired to lousy.
Still: Pandora is trying to raise $100 million or more via IPO, and Spotify is getting another $100 million or more from DST, Kleiner Perkins and others. Then there’s Rdio, and Beyond Oblivion, and SoundCloud, etc.
The big rap on subscription streaming services like MOG, Rdio, Rhapsody and Spotify is two-fold: Royalty fees from the music owners are too high, and consumer demand is too low–if people do want to spend money on digital music, they do it on a track-by-track basis at Apple’s iTunes store, not by signing up for a $10-a-month commitment.
But MOG founder David Hyman, like many of his peers, says that things have finally changed: He says he has worked out label deals that let him make money, and that new technology–he’s particularly excited about getting streaming Web music into cars–makes subscriptions appealing to mainstream consumers.
“Music is all about portability, and it was never going to take off until smartphones and 3G,” he said. “[Without that] it was like having a book, and being told you couldn’t read it outside of a library.”
Investors who’ve seen MOG’s pitch tell me the company is projecting $14 million in revenue for next year, which seems like a very, very long stretch: Industry scuttlebutt places MOG’s total subscriber base in the 20,000 range, which is where Thumbplay was before it gave up and sold to Clear Channel earlier this year.
Hyman won’t comment on the $14 million projection or subscriber numbers, but he does point out that MOG has a second business, selling advertising for a network of music blogs. He says he’s working with 1,500 properties, which collectively attract 39 million uniques a month.