SXSW: As MOG Goes Mobile, the U.S. Waits (and Waits) for Spotify

Music service MOG lifted the lid on its new mobile applications this morning at SXSW, promising premium subscribers the ability to stream any song, anytime, anywhere, on both iPhones (s aapl) and Android (s goog) devices. With the new apps, scheduled for launch early in the second quarter of 2010, MOG becomes yet another company that will offer ubiquitous on-demand access to a large library of songs, following Thumbplay’s launch earlier this month and Rhapsody’s last year -– and representing a further erosion of opportunity for Spotify, the European streaming music provider whose U.S. launch has still failed to transpire.
MOG’s cloud-based mobile service will cost $10 a month, double that of its well-received desktop-only product, which features custom radio and playlisting in addition to the on-demand component. Music service providers, including Rhapsody and Best Buy-owned (s BBY) Napster, have long hoped that adding on-demand mobile access would boost consumer interest in subscribing to music, sometimes derided as renting music. To date, the Rhapsody service -– which added offline storage will soon feature offline storage to on its existing mobile apps this weekend -– has gotten little momentum from smartphone adoption.
Daniel Ek, chief executive of European streaming music provider Spotify, is scheduled to deliver a keynote interview tomorrow at SXSW, prompting speculation that the company could finally launch in the U.S. Spotify is testing the freemium model for streaming music, offering free ad-supported streams to PCs and a premium ad-free service in both desktop and mobile versions. The free product has proven wildly popular in Europe, but the company hasn’t yet demonstrated that its conversion rate — thought to be less than 4 percent in a February estimate — is high enough to satisfy record labels.
Since last summer, when the extremely well-funded Spotify began gearing up for entry into the U.S. market, content owners have soured on free streaming, and called Spotify’s freemium model into question. Warner Music Group (s wmg) chief Edgar Bronfman Jr. recently said the label wouldn’t support “get-all-you-can-for-free” models in the future but remained happy to work with subscription services. Spotify long ago admitted that its model might look different in the U.S., and I’ve been hearing for months that a free version with all four major labels on board is unlikely to appear stateside.
Spotify’s desktop product is wonderful, but the European market has already shown that it’s more compelling as a free product than a paid one. If it’s to be just another subscription service in a crowded field on this side of the pond, Spotify may have fumbled a potential early-mover advantage by holding out for a licensing agreement with labels that would allow a sustainable free version. Running afoul of content owners and squandering a head start can really bring a company down, and in Spotify’s case, doing so has given other innovators an opportunity to sign up paying customers. That may be why investors on both sides of the Atlantic have doubled down on MOG.
For the GigaOM network’s complete SXSW coverage, check out this round-up.