Beats Electronics has a plan and it's much bigger than Mog
Beats intends to acquire Mog and sources tell CNET that the headphone maker wants to use the music service as the backbone for a new Web store that will sell music, headphones, and much more.
If Beats Electronics acquires Mog, the maker of the popular headphones has plans that go way beyond subscription music.
CNET broke the news three weeks ago that Mog, an also-ran subscription music service, was for sale and AllThingsD yesterday reported that Beats intends to acquire Mog, but the deal has yet to close.
A Mog spokesperson did not respond to an interview request. A Beats representative wasn't immediately available.
Sources close to Beats say managers intend to build a Web store that will sell music, headphones, and numerous other products. Apparently, the idea is to cash in on the Beats brand, which is quickly becoming to headphones what Nike is to sneakers. You can't walk down the streets of New York, Los Angeles, or any other major city without seeing someone's head swaddled in a set of Beats.
This seems like the natural time for Beats to make a foray into other products. Last August, HTC reportedly spent $300 million to acquire a 51 percent stake in Beats, so the consumer-electronics company is going to want to make its money back. With HTC behind Beats, the company now has the financial muscle and a mobile-platform in which to help it expand.
To create the store, Beats co-founder Jimmy Iovine, who in his day job works for Universal Music Group running Interscope/Geffen records, could use Mog as the base for his new digital store if the deal goes through.
Whatever Iovine and co-founder Dr. Dre are asking, David Hyman, the always candid chief of Mog, should leap at it. As a standalone music service, Mog hasn't fared very well.
Mog has been slogging it out for five years but has never been able to break out and has now been eclipsed by two larger competitors. Spotify, which launched in the United States last summer, gathered a larger audience in less than a year. Mog has also taken a backseat to Rhapsody, which topped the 1 million paying-subscriber mark following the acquisition in October of Napster.
The number of Mog's paying users is believed to be less than half of Rhapsody's. AllThingsD wrote that Facebook data tracker AppData puts MOG's users at 130,000 people who use the service via Facebook at least once a month, "though it's possible that Hyman has several thousand other users that he's acquired outside of the social network."