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Updated: For the past week or so, there have been rumors that MOG, the digital music subscription story has been been sold to HTC Corp., the Taiwanese mobile phone maker. Business Insider first reported the rumor and later AllThingsD confirmed that they too had heard similar talk. Our Janko Roettgers confirmed that indeed the two companies had indeed swapped term sheets.
HTC, which had acquired a substantial stake in Jimmy Iovine’s Beats Audio, has been planning to launch its own music service for a while. I had reported earlier this year that the company was in the process of launching its own music operation, likely at Mobile World Congress. Well, it seems building the music platform isn’t that easy, and that explains why it has been interested in MOG. So the big question is how much did MOG get sold for?
Sources close to the company say that MOG was sold for a shade under $
12 14 million — peanuts compared to the $25 million it raised in venture capital. The funds came from HTC, but the deal is being funneled through Beats Audio. Another source close to MOG, who got in touch after the story was published, says that the number is significantly higher, but that the deal isn’t done. (updated at 12.19 pm PST)
The really low price also indicates that the company might have lost traction in the market place. MOG founder and CEO David Hyman has recently said that the company had 500,000 active users. However, the US launch of Spotify (with the blessings of Facebook) has acted as quicksand for its rivals including the likes of MOG.
The low price being paid for the company shows that HTC might be interested in buying the software platform more so than the agreements with record labels, which are typically not easily transferable to buyers. Buying a ready made platform only accelerates HTC’s time to market.
In another bit of music industry intrigue, two well-placed sources familiar with Spotify say that the company is raising a big round of funding at a valuation of between $3.5 billion to $4 billion. Spotify has recently launched in Germany and Ireland. It will soon launch in Australia as well as they race to go global. Spotify has more than three million paying users.