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HTC Music Service May Be MOG Takeover Instead

A month ago we reported that HTC was planning to launch a streaming music service. The move would follow the handset maker's $300 million controlling stake of Beats Audio which meant future HTC smartphones and tablets would have better, top-notch speakers, packing big sound in a small space. The service would thus serve as the default music client on those HTC phones and tablets, but there was speculation that the music service would be offered to other hardware platforms given that Beats co-founder Jimmy Iovine isn't a big fan of Spotify.

Now there are reports that HTC subsidiary Beats Audio, or rather Beats Electronics, is planning to purchase digital music subscription service MOG for an undisclosed sum. An unnamed source close to the talks reports that the two entities have been in discussions for weeks, and that a deal could be announced soon. MOG has raised more than $33 million from investors since 2005 and the price being discussed will surpass the investment.

If the purchase does indeed take place, MOG may be renamed but still offered to multiple platforms. The subscription service would likely be integrated as a discounted offer to consumers purchasing HTC smartphones and tablets, Beats' popular 'Beats by Dr Dre' headphones, and possibly even HP laptops which feature Beats technology. For other customers it would likely be business as usual, offering the Free, Basic and Premium subscription models.

Just last month 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. He said MOG now has more than 500,000 active users although how many of those are actual paying customers is unknown. And since its integration with Facebook last fall, the social website has tossed over around 5,000 new users each day.

MOG was founded in 2005 by David Hymen, 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.

Although the deal with MOG hasn't closed, HTC is expected to launch something this summer. What may happen is HTC/Beats purchasing the subscription-based portion of MOG while leaving the MOG Music Network as a stand-alone entity once again. MOG originally started out as a music-themed social network and blog network until it launched its music ad network in 2008. MOG didn't get into the music subscription service until 2009.

Naturally HTC has denied reports of the MOG acquisition. The company said that HTC and Beats are two independent companies, and that it has no comment on any plans for Beats to acquire MOG. Both Beats and MOG also refused to comment on the possible acquisition.