MOG Grows Fastest Among Facebook's On-Demand Music Apps
MOG Grows Fastest Among Facebook's On-Demand Music Apps

The cat's now out of the bag that MOG tomorrow will unveil a new, ad-supported free music tier to its otherwise paid subscription service, called FreePlay.

And while the service will get plenty of reviews over its usability and speculation on its impact, the real story is why MOG has taken this step, not how.

First, the how. Unlike rival Spotify's free tier, which is limited to 10 hours a month, MOG's offer is not limited by time, but rather activity. What that means is that users are provided with a meter, what the company calls a "gas tank," which shrinks as more free music is played, but can be filled by engaging in various activities.

That includes watching an ad (such as a movie trailer) or engaging with any of the brand supporting the service. But it also includes doing anything that MOG feels is a promotion activity for its own service, such as referring friends to the services, sharing a playlist, and so on. It only works on the web-based version of MOG. Anyone who wants to use MOG on their phone or in their car will have to subscribe.

Where this really gets interesting is in the viral opportunities offered by Facebook. MOG has added the ability to register with MOG through Facebook Connect. Doing so means every time a user logs into MOG, the meter gets a bit for full. And once Facebook unveils its music plans, expected Sept. 22, the offer gets even more interesting.

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"One could imagine that if a Facebook platform were to launch soon after the launch of this, one could envision that this was built very much with that in mind," teased MOG CEO David Hyman. "Because if somebody is in Facebook and clicks a 'play' button on your page, they would immediately come into [MOG] with zero friction. They wouldn't have to register or download anything, the song would start playing instantly. Because this Facebook platform which I'm reading about puts everything on your profile and wall based on your plays, then all you have to do to be viral is just listen to music, because all that stuff is shared on your Facebook page."

One might assume the free tier is in response to Spotify's U.S. launch earlier this year, but in reality this process has been in the works for more than a year. MOG has had multiple meetings with record labels to get them on board with a new licensing mode to allow for what Hyman calls a "sustainable" free tier.

"Anytime you do something out of the box, there is no precedent," Hyman says. "No preconceived pricing, no existing contracts. It's really f---ing hard. We had to bring our CFO to meetings all over the country and walk them through models and pricing. Some of the labels you'd think would be the holdouts weren't the holdouts, and we were surprised which ones were. It's really the act of herding cats. There's also cash upfront, payment fees and structures. We wanted to do it in a way that we thought would work."

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What's most interesting is that this move brings MOG full circle. According to Hyman, MOG was originally intended to be an ad-supported free music service, but had to change gears when the labels suddenly abandoned their support for the model. Remember the Total Music initiative-the music industry-driven white label subscription service that was supposed to power a new generation of digital music services, but was then suddenly shuttered? MOG was built on the promise of that as its foundation, and every move its made since has been a reaction to that near-catastrophic development.

"The first two years that we built MOG, we thought we were building a free ad-supported music service," says Hyman. "Then in 2009, when the economy collapsed, they pulled the rug from under us. We raised money from Sony and Universal to build an ad-supported music service with Total Music as our backend. Then they killed Total Music and our back end disappeared."

So now, MOG is again free, although Hyman stresses that FreePlay is purely a customer acquisition ploy to drive subscriptions. The money it makes from the ads is only enough to cover its music licenses, and nothing more. Which makes sense, because the best way that services like MOG can grow is through word of mouth from friend to friend.

When one friend on MOG shares sends a playlist to another friend not using MOG, a huge opportunity is wasted because that other friend is not going to enter in a credit card number to sign up for a free trial just to hear 10 tracks. And even if he did, it won't do him much good once the 14-day trial is over.

MOG's challenge will be to make sure the activities required to fill users' free music meter won't be too onerous or interruptive. It needs to be seamless. And while MOG touts a team of game mechanics experts to help in that effort, the real proof will be in net subscriber adds.

"We think that this, coupled with a potential Facebook music platform, will be a key watershed seminal moment for our company," Hyman says. "This is a way to get mass virality around usage through real free offering."