MOG Challenges Spotify With Free Music

No-cost streaming comes in exchange for brand pitches

It’s cloud-based. It’s on-demand. It’s all-you-can-eat. Or listen, rather. It’s customizable, “intelligent,” browser-based, built in HTML5, and curated. It’s a music service that competes with Spotify, Rdio, Rhapsody, and Pandora. And now, it’s free.

At midnight tonight, music listening service MOG will open its 11 million songs to users in the US at no cost. Previously, the service charged a monthly subscription. But to compete in a crowded field, the service has offered up its catalogue—for which it pays licensing fees to the major labels—in a “freemium” business model it cribbed from Dropbox.

The idea is that each user begins with a set amount of free music which is tracked like a gas tank. After one’s listening tank empties, users will be able to “earn” more free streaming by interacting with the service, and with brand sponsors. The interactions can be anything from watching a movie trailer, to simply making a playlist or sharing a song on Facebook. “There are two types of people: those who have jobs and those who don’t. Those who don’t are perfectly willing to interact with brands in exchange for free all-you-can-eat, on-demand music,” said MOG Ceo David Hyman.

MOG will also earn money from digital audio ads starting in 60 days, and other marketing offers like branded playlists. Hyman gave the example of a pickup truck brand sponsoring a playlist of country music songs. And for the brand-averse, MOG’s paid, ad-free subscriptions—$4.99 a month, $9.99 for mobile—will still be available.

The service is slightly different from Spotify because it’s in a browser and built on HTML5. MOG allows users to download tracks to mobile devices, and it’s also got a sophisticated built-in “intelligent radio” engine which plays artist-specific channels. Once a user connects with his or her Facebook account, MOG recommends music based on that user’s Facebook “likes” of artists and even the “likes” of that user’s Facebook friends, in an attempt to address the problem of users not knowing what to play.

MOG plays in a competitive field: Spotify, which entered the US in August, has more than 10 million worldwide users. Pandora has 80 million users. But Hyman is bullish: “We win every single shootout that we’re in,” he said. He touted the service’s emphasis on passive listening features, 11-million song catalog (from which it recently eliminated 3 million karaoke songs), its instant personalization thanks to its Facebook partnership, and its high resolution audio.

The company, alongside Spotify and RDIO, will be involved in the launch of Facebook Music, details of which are expected to be announced at Facebook’s upcoming F8 developer’s conference on September 22.

MOG has investments from Universal Music Group, Sony, Simon Equity Partners, Menlo Ventures, Balderton Capital, and Scott Jones, the founder of the digital media recognition software company Gracenote.