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Summary:

Berkeley, CA-based music service Mog.com, which recently launched its subscription music service with good review, is taking a new VC round…

Mog

Berkeley, CA-based music service Mog.com, which recently launched its subscription music service with good review, is taking a new VC round to finance an entry to the UK market, promising to undercut the much-hyped Spotify and CBS-owned social site Last.fm, we have learned.

The second round closed at around $10 million, with previous investor Menlo Ventures and new investors, European VC firm Balderton Capital splitting the investment, our sources say. The valuation is about double of what it raised $5 million at last summer, so a significant bump up in a short period. Mog is looking for a GM to run the UK service now. The money was raised by media i-bank MESA Global, which has of late been doing a slew of fund raises, along with the usual lineup of M&A deals.

Mog.com had already raised a total $12.5 million from Menlo Ventures, Simon Equity, Universal Music Group and *Sony* Music in the last four years, including $5 million in August.

Last.fm has been amongst the leaders for a social music experience but doesn’t offer on-demand, Spotify has a fantastic on-demand experience but has little social experience – but Mog.com now has elements of both. Though it originated as a place for members (Moggers) to blog about music they like, in December it added All Access, an on-demand music subscription costing $5 a month.

CEO David Hyman spoke to our UK editor Robert Andrews last month at Midem (prior to the close of this funding), and wouldn’t detail take-up of its newly launched service, but a subscription that cheap could prove popular in UK. Spotify’s subscription costs £9.99 a month (for ad-free or mobile) in UK, and Hyman said: “We’ll be much cheaper than that. We don’t have to offset the burden of haemmorhaging per-track costs.”

Last.fm has not been successful in the U.S., despite being bought by CBS (NYSE: CBS), and the talk is that U.S. labels are adamant they will sanction only Spotify’s premium service, not the free, ad-supported offering. Like them, Hyman will be challenged to launch a service from scratch across the pond – but he was withering in his assessment of each…

Spotify: “We’d like to do free, but the model doesn’t work – imeem just went out of business – the services are haemmorhaging money. The labels won’t let them continue to do free. Contrary to what you read, I don’t think you’ll be seeing that (free Spotify) in the States at all. Free’s cool, free’s like crack.” Could Mog.com partner with Spotify? “I don’t know why we’d want to. They’re losing a lot of money. You can do free, but that’s the easy thing, almost the booby prize.”

Last.fm: “Last.fm never gave you the music” (it has playable tracks but, like Pandora, it’s a radio, not an on-demand, offering). “Once they got acquired by CBS, they haven’t done anything. It was cool back in the day.”

Unlike either of those, though, Mog.com has little recognition in the UK and will need to build its brand there.

The market is getting increasingly crowded for subscription music services, with the above, Sky Songs, Virgin Media’s forthcoming service, We7, upcoming Rdio and others all taking advantage of labels’ increasing embrace of legal digital services to launch their own version. The idea of unlimited downloads for a monthly tariff could challenge the a la carte download model pioneered, and still led, by iTunes Store – but many expect *Apple*, eventually, to launch a subscription package of its own.

Update: Balderton later confirmed its investment Friday morning, saying UK launch will come “by the end of the second quarter of this year, with a comprehensive catalog of music of approximately seven million songs”. It said 17 percent of free-trial users of Mog.com’s All Access service converted to paying for it.

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  1. Amarendra Bhushan Friday, February 26, 2010

    when I think online radio these days, it’s recommendation and personalization services like last.fm and Pandora that are pushing the boundaries. I’ve been using MOG for a few months and they have a good selection of music.

  2. Sounds interesting – look forward to it arriving properly in the UK.

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