Market Watch

MOG Expands Music Service to Mobile



The US-based music rental company MOG has launched MOG Mobile. Only available in the US at present, MOG offers on-demand listening from a catalogue of 8 million tracks for $5 per month PC-only, or $9.99 on PC and mobile.

Analysis
MOG Mobile is indicative of renewed activity in digital music subscriptions.  Driven by the rise of app stores the market is becoming increasingly crowded with the likes of Thumbplay and Rhapsody already providing similar services for $9.99 per month. While other major players including Google, Spotify and an expanded Zune service for Windows Phone 7 are widely expected to launch similar music products (with almost identical catalogues) in the US in the near future.

In order to stand out in this increasingly competitive market companies like MOG will not be able to rely on catalogue (which is set to remain broadly identical over every service), but instead will have to rely on the service that they build around the content. With its online subscription MOG has already started doing this, taking a leaf out of Pandora's book and building a highly customisable radio component into its service. This personalised, programmed content allows MOG to simultaneously differentiate from other services in the market, although Screen Digest understands that it does not allow from the lower royalty rates associated with more conventional radio services.

Despite a revival of activity in the sector, fuelled by the growth in smartphones, market conditions remain challenging. The RIAA reports that revenue from music subscriptions declined $221m in 2008 to $213m in 2009. What makes this decline all the more significant is that the US was the only Western market that has historically got any precedent of adopting full track music subscription services. In this context it is telling to compare personalised radio service Pandora's move into profitability in Q4 2009 (on the back of lower radio royalties) with RealNetworks which recently reported a loss of almost $26m associated with its 47.5 per cent share true on-demand streaming service Rhapsody for Q2 2010.

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