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Within a few hours of each other, Mog and then Rdio announced they will add free-to-play tiers to their subscription online music services, in a bid to drive up consequential paid subscriptions.
It looks like affirmation of rival Spotify’s freemium model, with which it has attracted 1.6 million paying subscribers by giving some free plays to a total 10 million users.
Mog and Rdio had previously only offered just one hard subscription service. Their additions are also an endorsement, generally, of the freemium business model, which snags paying customers using limited free offering as temptation and is deployed by services including Dropbox.
But their implementations differ slightly.
Like Spotify nowadays, Mog, which is calling its free taster Mog FreePlay, will limit free plays by track play count, but users are incentivised to earn more track plays by engaging in social interaction. Sharing playlists with friends or referring them to Mog itself will extend the number of times a user can play Mog music for free before having to shell out for Mog All Access. Such referrals, in turn, amplify Mog’s exposed potential subscriber base.
Rdio announced its new free service within a few hours of Mog but details are not yet available, though a spokesperson says its free offering will not depend on advertising like Spotify’s does. That also appears to be the case for Mog.
As well as using free for premium leverage, however, Spotify also considers free a business in its own right – it makes millions in advertising revenue by placing audio ads between songs and banners in its app.
Until recently, Spotify had offered unlimited music free with ads. But a condition of its U.S. launch had been to halve free time from 20 hours to a hard 10 hours per month and to introduce a five-song play limit. Mog’s use of a more flexible, socially-determined free threshold is more innovative than Spotify, and borrows something from Hulu, which gives more Hulu Plus premium viewing time to users who make social referrals.
Eyes must now fall on rival Rhapsody. In March, it extended its 14-day free trial to 60 days thanks to a marketing partnership with MTV. But the new period, like the old, still required users cough up their credit card details at the outset…
Though Rhapsody has turned around subscriber decline after its spin-off from Viacom (NYSE: VIA) and RealNetworks (NSDQ: RNWK), this means it has a far harder freemium lever than its younger subscription-music rivals, which themselves are now recasting their models to cope with the new Swedish kid on the American block.
Spotify’s five-song limit is a label stipulation that nevertheless appears to have given it a premium advantage lever. In France, however, the Deezer service has won court backing for its argument that it should not have to implement such a limit.