????Beats co-founder Iovine has also long championed the sale of higher-quality mp3s, appealing to record companies to provide first-rate sound files to online distributors like Apple's iTunes. MOG has the highest quality-streaming rate of the major subscription services. Ross Rubin, an analyst with NPD, says because of the constant improvement of streaming, MOG's lead "doesn't seem like a strong differentiating factor." Still, Iovine has ties to legendary record producer and Columbia Records co-president Rick Rubin, who sits on MOG's board of directors. When Iovine began his campaign for higher quality sound files, he asked Rubin to do the same at Sony (SNE), Columbia's parent.
????If a deal for MOG materializes, how would HTC benefit? One possibility is bundling MOG with its Android offerings. Last year, Rhapsody created a partnership with mobile phone carrier Metro PCS (PCS). So far, results have been unspectacular. Another possibility is all three brands creating an "end to end" product combining music streaming, Beats audio technology, and HTC hardware, says Rubin, the NPD analyst. MOG could even be rebranded, taking the Beats moniker. CNET reported rumors of plans for a new commerce website that sells music, headphones and other items.
????There are also some potential landmines. If HTC pushes MOG onto its handsets, it may upset deals that carriers have with other music subscription services. Plus, MOG's business is still small compared to Spotify. It is estimated to have under 100,000 paid subscribers compared to its larger rivals 3 million worldwide. Apple has made gains because it owns the entire experience, from hardware to software. Google bought Motorola (MMI) to achieve similar efficiencies. But HTC is much smaller.
????Still, NPD's Rubin says the acquisition is an investment. "The idea is that, over time, new generations of consumers will care less about ownership and more about access," he says. Iovine seems to be on the same page. In 2010 he told Billboard, "We're in the music transmission business," he said. "I just want people to enjoy it more. Whether they buy it…or borrow it." With MOG, HTC and Beats may very well be able to lend it to them.
