As a happy customer, I’ve tried my best to evangelize MOG and other subscription-based music services to friends and family. The conversation is always the same: Millions of songs on-demand? Awesome! $10 per month? Not bad. You can’t keep any of the music after leaving the service? Nevermind.
It’s an idea that takes getting used to, and most people aren’t willing to take the plunge for $10 per month. So I’m not surprised that MOG is working on a freemium business model that it hopes to introduce in a couple of months. Evolver.fm’s Eliot Van Buskirk reports that MOG will give away limited access to its streaming catalog in hopes of roping in more users.
Outside the United States, Spotify runs on a similar business model, giving away 10 hours of streaming music and putting smartphone access behind the paywall. But stateside, record labels are skittish about such a generous freemium model, fearing that it could cut into sales on iTunes and elsewhere. That could explain why Spotify has been cutting back on the amount of music it gives away as it moves toward a U.S. launch.
How MOG will limit free users is unclear, but Van Buskirk says video advertising — and more advertisements in general — could keep the free service from bleeding to death on licensing costs. The paid version, of course, is ad-free.
In any case, going freemium will be a gamble for MOG. I’ll bet MOG will lose some customers who think they can get by on the free version. But without the barrier of credit card entry, more people may get accustomed to streaming from a huge music library instead of owning a small one. If my anecdotal experience is correct, that’s a big hurdle to clear.