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HTC/Beats Electronics Acquires MOG Music Service

Beats Electronics LLC confirmed with USA Today on Monday that it has purchased online music service MOG.

News of the possible acquisition surfaced back in March after there was talk that HTC -- which owns a $300 million controlling stake in Beats -- was looking to launch its own music streaming service that would rival Spotify. Meanwhile, MOG Chief Executive David Hyman fought off rumors that the company was struggling in the competitive music subscription business and actively seeking out a buyer.

Now Hyman is calling the acquisition a "truly end-to-end experience" for music lovers.

"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," said MOG founder and CEO David Hyman in an email exchange. "The addition of MOG's music service to the Beats portfolio will provide a truly end-to-end music experience."

Beats Electronics and MOG did not disclose the terms of the acquisition, nor have they provided examples of how the companies' products might be cross-promoted. MOG offers unlimited ad-laced music listening on the desktop for free, and charges $4.99 USD monthly for ad-free listening. There's also the $9.99 monthly subscription which not only removes ads, but allows users to stream music to their mobile devices, Smart TVs and other gadgets.

MOG was founded in 2005 by David Hyman, former CEO of Gracenote, former SVP of Marketing at MTV Interactive, and former Director of Ad Sales for Addicted to Noise. The actual business is 50-percent subscription-based while the other half receives its revenue from its advertising network called MOG Music Network. This network places ads on more than 1,700 music sites and typically receives more than 60 million unique visitors a month.

Beats Electronics was founded by hip-hop/rap artist and entrepreneur Andre "Dr. Dre" Young and Interscope-Geffen-A&M Records chairman Jimmy Iovine back in 2006. Handset maker HTC acquired a 51-percent majority share in August 2011, but has since allowed Beats to operate as an autonomous company. Yet with MOG now under the Beats Electronics roof, HTC will have direct exclusive access to a music streaming service it now doesn't have to build from scratch.

"Time will tell exactly how we integrate our products and services," Hyman said. "MOG and Beats have a shared vision of providing a premium sound experience to listeners and increasing the emotional connection they have with music so building on the solid foundation we've created, the possibilities around future innovation are endless."

According to Beats' president and chief operating officer Luke Wood, MOG wasn't the first choice when Beats set out to acquire a music streaming service. But it was MOG's commitment to music fidelity that eventually inked the deal.

"They were the first service to offer their entire catalog in the 320-kilobit format. I also think they were the most progressive and the first service to be really committed to multiple access points in the deals they did with LG and Samsung for the TV and BMW for the car (and) they were very quick to push music to the smartphone," he says. "They understand that the consumer wants ubiquity. They have an extremely talented management team and engineering staff. So it's really about the product, the service and the talent at the service we are buying."

While the details regarding the acquisition are minimal at best, MOG founder and CEO David Hyman will reportedly continue to operate MOG as a stand-alone music service. "For now, MOG will remain the same product today as it was yesterday and offer the same rich experience," Wood said in an interview. "What we do know is that we're committed to offering an integrated experience for the consumer -- from the point of discovery to the point of playback."