Beats Electronics — maker of the Beats by Dre headphones everyone seems to be wearing these days — is now in the actual music business. The companies announced on Monday that Beats will acquire the MOG music service, culminating a deal that had been rumored for months.
Beats Electronics was founded by Dr. Dre in 2006 with industry insider Jimmy Iovine as a way to make money selling hardware with an emphasis on sounds quality (particularly in the bass frequencies) which the rapper and producer thought was missing from most consumer music hardware, leading to an overall degradation of sound quality within the industry. Likewise, MOG has always emphasized that it offers streams and downloads at 320 Kbps — the highest sound quality available in an MP3.
The deal has been a long time coming, but appears to have been completed over the weekend. The New York Times reported in March that the two companies were in talks; the LA Times reported on Saturday that the deal was going to happen for $1o million, a number that is in line with what we were hearing as well.
Early this morning, MOG founder and CEO David Hyman posted a couple “Beats by Dre” images on Facebook. Evolver.fm confirmed that the deal was inked (read the announcement below) — and that this marks Beats’ first acquisition of another company:
“Beats is a company as obsessed with sound quality as we are and we share a common goal of creating a more premium sound experience and emotional connection with music in the digital era,” MOG founder and CEO David Hyman told USA Today via email. “The addition of MOG’s music service to the Beats portfolio will provide a truly end-to-end music experience.”
The LA Times reported that the freemium music service MOG, which saw usage grow significantly following its Facebook integration, has about 500,000 “subscribers” (more likely, the LA Times meant “registered users”). The company had not previously released that number, which is about a sixth as many paying subscribers as Spotify had at last count.
Beats, in turn, took a $300 million investment last summer from smartphone (and other electronics) manufacturer HTC for an “undisclosed stake” in the company. Earlier this year, Beats said it would sever its relationship with Monster Cable by the end of 2012, as noted on the MOG blog.
Between Beats, MOG, and its own stuff, HTC can now connect the dots between smartphones, headphones/speakers, and a freemium music subscription, offering ample opportunities for bundling, cross-promotion, and co-branding.
Update: MOG’s announcement is live:
The Future Sounds Awesome.
Fellow Music Lovers,
My first love has always been music; I can’t imagine my life without it. I’m a self-proclaimed music junkie obsessed with sound for as long as I can remember. My life has been enriched by music and I strive to make music more important in people’s lives.
MOG, our little company based in Berkeley, California, was given birth by a bunch of folks who were saved by the power of music. MOG is our payback to the artists that have given us so much. Our mission has been simple: Perfect your music-listening experience. For the past four years, we’ve worked to give users access to the world’s collection of music from virtually everywhere. MOG surpasses all other music services in its ease-of-use, discovery features and audio quality – now we’re ready to begin the next chapter in MOG’s journey.
We’re thrilled to announce we are joining forces with Beats™ Electronics LLC, the company co-founded by legendary artist and producer Dr. Dre with Interscope, Geffen, A&M chairman, Jimmy Iovine.
When approached by Beats, we realized it’s a company as obsessed with sound quality as we are. Both MOG and Beats share a common goal of creating a more premium sound experience and emotional connection with music in the digital era. To date, Beats has done just that through headphones, speakers, mobile phones, personal computers and automobile sound systems. The addition of MOG’s music service to the Beats portfolio will provide a truly end-to-end music experience. Beats is investing in the talent, technology and shared vision the MOG team has built, so subscribers can expect continued excellence from the best music service in the market.
MOG will continue to operate as an independent company with no immediate changes to our music service; there will be no impact on you. You’ll continue to have the same access to a vast catalog of unlimited, on-demand, high-quality music from virtually anywhere. Our talented music service team will remain intact, and I’ll maintain my role as CEO of MOG. If you have more questions about your MOG subscription specifically, here are more details in our FAQ.
I want to personally thank all of you for choosing MOG. Your continued support and feedback have given us the opportunity to share our passion and love for music. Building upon the solid foundation MOG has created, together with Beats, the possibilities around future innovation are endless.
David Hyman, Founder and CEO, MOG