Centralization and MOG acquisition

Wolfgang Spraul posted a long and interesting comment which is worth reading in its entirety. The gist of it is that increasing centralization of the music industry is bad for musicians and listeners.

I agree that less choice of vendors is a bad thing. If Beats is aligned with a single distributor - MOG - then they will make life harder on customers of Rdio, Rhapsody, Spotify, etc.

But it’s really important to create a healthy foundation for the recording industry. The evolution of clusters of related businesses like { HTC + Beats + Universal Music Group + MOG } is about the ecosystem reconfiguring to match changes in the environment.

This is the change we are seeking. The business of recorded music needs to leave physical media behind, and that’s precisely why { HTC + Beats + Universal Music Group + MOG } exists.

That doesn’t mean this is the final form of the business. A device has to play all the content in the world, so companies like Beats and HTC can’t lock out distributors aside from MOG. They have to allow Rhapsody et al into their world.

How will Beats go to market with MOG? My guess is that the MOG brand will be abandoned in favor of the Beats brand. MOG's software, like the in-browser app and mobile apps, will continue to exist, but will be named "Beats."

When you get an Android phone with "Beats", that will mean it comes with a subscription to MOG. You'll be able to add a subscription to Spotify or whatever other service interests you, but you'll have already paid for the MOG subscription as part of the purchase price of your device. That means phone prices going up to cover the subscription. Where will the money come from? The subsidy paid by your telecom. The cost is about $10 a month. I suppose that will be added right on top of your phone bill.

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3 Responses to “Centralization and MOG acquisition”

  1. catullusrl

    I agree with you about the rebrand. But I think UMG want to build up a Beats subscription service in order to weaken Spotify. I believe the UMG link has been one of key factors behind Beats success. Every Lady Gaga and Black Eye Peas video has been promoting it. I think your going to see lots of product placement in UMG videos going forward.

  2. Gonze

    I definitely agree with the UMG link as a factor behind Beats’ success.

    I don’t know what I think about weakening Spotify as a goal. Maybe. But isn’t UMG a big equity holder in Spotify?

  3. catullusrl

    They don’t want Spotify to get into a position where it can dictate price of the licenses in the way Itunes did.

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