Beats Electronics Stated to become Pursuing MOG Online Music Service

In a deal that could signal the arrival of a prominent new player in digital music, Beats Electronics, the business that has transformed the high-end headphone market with its Beats by Dr. Dre line, is in the procedure of purchasing MOG Monster Headphones, an internet music service.
The deal has not closed, but negotiations are in their final stages Beats By Dr Dre, according to 3 people briefed on the deal who were not authorized to speak about it publicly. The cost was not known.
If completed, the deal would be a sign each of Beats' market power and of the tightening competition amongst digital music companies. In much less than 4 years Dre Beats, Beats, founded by the hip-hop star Dr. Dre and the record mogul Jimmy Iovine Dre Beats, has come to dominate the headphone field. With sleek styles and canny advertising, the business has produced a symbol of high-fidelity audio also as of high fashion.
The headphones Dr Dre Headphones, which sell for up to $500 a pair, have spawned a growing field of deluxe, celebrity-branded listening devices. As of last year, Beats Electronics' annual sales were nearly $500 million.
Beats has also been primed for expansion. Last summer the Taiwanese cellphone business HTC paid $300 million for a majority stake in it. A deal with MOG, whose technology is admired but which has failed to gain a lot traction within the market, would allow Beats to fulfill a wish Mr. Iovine has expressed previously: offering a phone-based subscription music service that delivers high-quality audio.
MOG streams music at a rate of 320 kilobits a second, a higher standard than most online solutions. Additionally, it has licenses with record companies and publishers, which occasionally take years for a new company to negotiate.
A deal linking HTC, Beats and MOG "would close the loop when it comes to a vertically integrated providing," stated Ross Rubin, an analyst with the NPD Group, a marketplace study firm. "The playback device, the service and also the listening device could all be optimized for Beats."
News from the talks between MOG and Beats was first reported by Company Insider. Representatives for Beats and MOG declined to comment, but on Tuesday HTC issued a statement saying, "Rumors and speculation of an acquisition of MOG by HTC are untrue." The people briefed on the deal said that Beats, not HTC, was the negotiating party.
MOG was founded in 2005 as a method to connect music blogs, and it nonetheless operates an marketing network for blogs that the company says produces half of its revenue. In 2009 it introduced a subscription streaming service for $5 to $10 a month.
Last fall, to make the most of a brand new media platform on Facebook that allowed elevated sharing, MOG also began to allow a restricted quantity of totally free access. David Hyman, the company's chief executive, said lately that it had 500,000 active users. The company has not said how numerous of them were paying subscribers, but music executives estimated that the quantity was well below 100,000.
The on-line streaming market has become crowded and competitive in current years, with players like Rhapsody, Spotify and Rdio, and analysts have lengthy been predicting that some consolidation was inevitable. Late last year Rhapsody purchased Napster, a rival service, from Best Buy, which brought its subscription rate to 1 million.
"The marketplace today is just not large enough to sustain all of the players as independent entities," Mr. Rubin stated.
Spotify, which is accessible in 13 nations, announced in January that it had three million paying subscribers. And in the South by Southwest festival last week in Austin, Tex., Sean Parker, who's on Spotify's board, predicted that Spotify would "overtake" iTunes in much less than two years.