After months of speculation, it is finally confirmed that headphones maker Beats Electronics is buying online music service MOG. Beats is the company behind the Beats by Dre series of iconic headphones and started by rapper Dr. Dre and Jimmy Iovine, chairman of Interscope Geffen and A&M Records. Handset maker HTC Corp is a majority investor in Beats.
USA Today‘s report on the story lacks any real deal details. The Los Angeles Times reports that MOG CEO David Hyman is expected to stay with the company.
The MOG-Beats sags is pretty long. In early February, just ahead of the big Mobile World Congress show, I had reported that HTC, with Beats, wanted to launch its own music service. A month later further rumors emerged that HTC might have bought MOG. My colleague Janko Roettgers later confirmed that indeed that HTC/Beats had exchanged term sheets with MOG. A few days later, some of my sources told me that the company might have been sold for around $14 million, but others close to the company said that the sale price is significantly higher. MOG had raised $25 million in venture capital funding.
Regardless of the price, the deal is a good indicator that it is insanely hard to build a big, sustainable business as a music startup. Who wants to bet that Rdio is the next one to get snapped up?
Business aside, I am happy for MOG CEO David Hyman for being able to find a home for a startup that he started in 2005. It takes a lot of perseverance to get through the ups and downs of startup life, especially one in the rough-and-tumble world of music.
Related, from GigaOM Pro Research (subscription required): Spotify, MOG demonstrate digital music flux)