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Monday, July 2, 2012

Beats Buys MOG

Beats - MOG image from Bobby Owsinski's Music 3.0 blog
Here's something I don't think anyone saw coming. Headphone maker Beats Electronics, owned by rap artist/producer Dr. Dre and music exec Jimmy Iovine, has acquired the digital music service MOG Inc. What's particularly interesting is that the purchase price was reportedly "less than $10 million" for a service that has 500,000 registered users. Sounds like a bargain to me.

The deal makes sense at that price since Beats is trying to create an ecosystem built around their headphones. If you have a supply of high-quality tunes to listen to (MOG uses a very good 320kbs codec), that side of the company can feed the headphone side and vice versa. With Iovine being the ultimate music industry insider, any licensing problems should be easy to overcome, especially since both Universal and Sony were owners in MOG (beside 3 venture capital groups).

Beats is an interesting story in that they take some more or less crappy Chinese headphones, jack up the price to way beyond what they're worth, and somehow get people to buy them. It sort of reminds me of Monster Cable, who does the same thing. The company has now taken over more than 43% of the headphone market, I'm sure much to the chagrin of quality headphone manufacturers like Audio Technica, Sennheiser, Shure and others. You snooze you loose, guys.

Let's see if Beats continues with their magic touch as they proceed with MOG in the fold.

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2 comments:

Anonymous said...

Funny you mention Monster Cable - Guess who manufactures Beats headphones?

Anonymous said...

beats headphones suck big time, they only vibrate your ears with some battery feeding the vibrators in the back, of course in relation to the music beat but that's the only thing they do, quality wise they are a waste of cash.

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