Is Beats Audio buying music-subscription service Mog? A report Monday at Business Insider has an unnamed source saying the deal was done last week, although a report Tuesday at All Things D said the deal has not yet closed.
While at press time, neither company's reps had responded to Billboard.biz's requests for comment, there are a number of reasons a Mog-to-Beats deal would not come as a surprise.
First, an acquisition jibes with previous media reports about the two companies. In response to a report last month that Mog was actively shopping itself, CEO David Hyman denied that it was true but said the company is "always engaged in conversations with our shareholders about all possible options."Earlier in February, GigaOm reported that HTC, which acquired 51% of Beats Audio last year for $300 million, is working on a music service for its mobile devices. For the right price (see the third reason below) it would be better for HTC to buy a service rather than build one from scratch. Mog has the product, the team and the licenses (for the U.S., at least). To build a subscription service from scratch would take years.
Second, both Mog and Beats Audio pride themselves on audio quality. Mog has always tried to use its 320 kbps streaming to differentiate itself from its competitors. Reviews of music subscription services by audiophiles put Mog atop its peers in this regard. Beats Audio, mainly though its Beats By Dre headphones, has helped bring high-quality audio to the world of digital music and portable devices. Acquiring Mog makes sense if HTC and Beats Audio want audio quality to be integral to their music service.
Third, Mog could be acquired for a reasonable amount. Mog is the U.S. subscription service with one of the lowest numbers of subscribers, and HTC couldn't acquire Spotify even if it wanted the company badly - the price would be astronomical given its growth trajectory and its venture-capital owners ,who surely want to wait for the best possible deal. Rhapsody and its 1 million subscribers would be pricey. To buy Muve Music would mean an unlikely investment in its creator, mobile carrier Cricket Wireless. And with Napster gone - it was acquired by Rhapsody last year - Mog and Rdio are the only dates left for potential suitors.