MOG’s Fallen King: Hyman Exits The Game

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David Hyman had a dream that came true. He spearheaded a Spotify competitor that delivered near-audiophile quality music to your phone. So good was MOG, that in July of 2012 it was bought by headphone innovator, Beats for reported $14 Million, which included relocating Hyman and his family to Malibu is serious first-class style. But, less than 15 weeks after the acquisition, the Hollywood honeymoon came to a dead end and Hyman was out of a job. What went wrong?

 

 

Moses Avalon

When AOL purchased Time Warner in the 90′s they created a hope that content and internet would finally marry. Instead, AOL stock dive-bombed from $90.00 to $9.00 and years later they dumped the media anvil. The reason cited in the book, Exploding (one of the best reads on content executives’ pathology) was the inability of the two cultures–Internet services and media/content–to find a common vision. Put simply, they just could not agree on which needed the other more.

A decade later, David Hyman is learning that same lesson, but this time, it’s a content company shedding a  CEO whose modern vision for music consumption was an unlikely match for a company trying to sustain a music catalog-based business model.

 

THE MEETING

The one and only time I met Mr. Hyman was at a dinner party this past October.  I was excited to meet the man who had been the CEO of Gracenote, a game-changing technology for digital music. I had also been advocating MOG over Spotify for its audio qualityUnfortunately, by the time the entrees were served Hyman probably thought I was a Luddite on a furlough from a 1980′s time-capsule. And why?

 

THE BUY BUTTON

During appetizers I asked Hyman when he intended to give MOG something that the record business desperately needed more of – a buy button. Streaming apps offer the hear it / like it / buy it end-to-end experience that terrestrial radio never could. Yet, unlike Pandora and other mobile apps, you cannot purchase or save the music you hear on MOG.

Hyman’s answer was a confirmed never. Noton his baby. His reason still echoes in my mind and is one that resonates with many technocrats:

“Who wants to own music when you can stream it from anywhere.”

But for those on the content side of the fence–that is to say, those that still sell “media,” this smacked hard. It also had me wondering if Jimmy Iovine, Hyman’s new boss; who acquired MOG to create an “end-to-end music experience” knew how his fair-haired boy saw the future of music sales.

Did Hyman think it was only middle-aged die-hards and audiophiles who wanted the actual media file? He mused: Kids don’t give a crap about owernship and never will. He used his own as examples. True, I thought– kids don’t give a crap;

…kids with smart phones

…healthy data-plans

…or hot-spots in their private schools.

And that’s most kids, right?

“I think kids get older,” I responded, “When young they rent an apartment, but one day they buy a home. Is it so hard to believe that this will be true of music too?” I had the table’s attention. “We still sell about 250,000,000 CD’s a year in the U.S. and have over one billion downloads on iTunes. So, why not allow those who want to buy, buy through MOG?”

But Hyman was adamant, feeling that a buy-button would only complicate and confuse the user interface.

It was about now that I was getting a clear picture of his future working for the world’s biggest record company. It would be weeks before the news of his stepping down broke, but that night, knowing the expectations of the machine that owned him, it seemed likely.

Did Hyman not realize he was now a record man? What was his vision of an “end-to-end music experience?”

Hear it / like it/ here it again / and again / don’t buy it / ever / hear it again?

And as the parfaits were served, it hit upon me what the disconnect was:

Many in tech do not see music as a taste-making artery of our culture. Instead they see music like water, like a utility, like something you subscribe to monthly but don’t connect to emotionally.

This is the divergence in product perception that kept Time Warner/AOL from bonding.

On one side, you have the content industry, shaping the vox populi for decades. On the other, you have the technocrats, once thought of as geeks, now they are the taste-makers of the moment and many believe that copyrights are silly, record companies are to be toyed with and that mental Darwinism should prevail over talented coke-heads.

I’m not suggesting Hyman felt this way. He was a hybrid; as much in the corporate music world as he is in technology. But in this writer’s view, you cannot serve equally the  two gods Hyman was finding himself between.

David Hyman: Paradise Lost

THE GOLDEN RULE

So, who won?

Like always, the one with the checkbook. When it was AOL’s checkbook, Time Warner lost, and this time, the checkbook belonged to Beats/Universal.

For those following the tech v content SOPA-opera Hyman’s exit from MOG should come as mild surprise. He is a talented executive who will be back someday probably with something even better.

I hope by then he learns how to ride this wild misterss we call music and avoids trying to tame it.

Mo out.

 

 

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20 Responses to “MOG’s Fallen King: Hyman Exits The Game”

  1. gopalo says:

    Mo: Best post ever. So will MOG get the buy button now?

    • Moses Avalon says:

      I would like to see Buy Buttons everywhere. Remember that this story is my speculation. Beats and Hyman may have parted company over something as simple as money. Time will tell if my guess is on target.

  2. Ted Myers says:

    It seems to me Hyman must care something about the emotional impact of music if his focus in developing MOG was audio quality. Isn’t that a bit of a contradiction?

    • Moses Avalon says:

      Most certainly it is a contradiction. He’s a super-smart dude and duality is not uncommon in such people. Hopefully he may be able to grace us with a comment on this forum to add some clarity.

  3. David Hyman is a bright guy and MOG is/was not a bad product. Like Rdio to a lesser degree, it suffers from offering a service not readily distinguishable from Spotify, on User terms just slightly inferior to Spotify’s. Daniel Ek (Spotify’s co-founder and front-man) didn’t invent anything; he simply delivered a quality AOD (Audio On Demand) experience legally and for free. But Spotify will be in more trouble than Pandora when Apple takes AOD streaming seriously. Streaming music is in the first round of a heavyweight match. If you don’t have more than playlist functionality to compete with, then the big money will steamroll you. Apple has 400 million CC accounts on file and a better library than Spotify… think about it.

    As for the BUY button, David was just a little ahead of his time. But his theory is sound. Radical.FM was in and out of Alpha testing for a year before our recent launch. Through most of that period we had a BUY button; it was not worth the space it took up on the interface. It is now gone. No user has yet requested it (though I suspect the labels may). As for kids inevitably growing up, that’s true, but their habits are formed and largely remain. And soon mobile broadband really will be ubiquitous. And then CDs and MP3s will be as nostalgic as vinyl is today. It’s no longer a question of if, but when.

    From the HotSeat,
    Tom McAlevey, CEO, Radical.FM

    • Moses Avalon says:

      “CDs and MP3s will be as nostalgic as vinyl is today.”

      MP3s for sure, but CDs have a special significance that goes beyond the nostalgia dynamic of vinyl. They are near-perfect audio archives. If my rent when young– buy when old theory is correct, then the CD will have major role in the near future b/c it’s far cheaper to buy a CD with 15 cuts for $11 that you can burn over and over again, than a digital album file for $9 that is merely a “license” to use on several devices and at a reduced bit-rate to boot. We’ll see.

      But what fascinates me is why tech-oriented people feel the need to “win” this argument by framing it as the “death of the CD.” As if that event will be a marker of victory.

      The very, very, very, high likelihood is that CDs (for buyers) and streaming (for renters) will co-exist peacefully in music just as they do in real estate, automobiles, and many other products. But those on the tech side of the argument have real trouble accepting that as a compromise. Almost as if they have some kind of emotional attachment to CDs dying. It’s very odd.

      • Michael Smith says:

        Agreed. The music ownership model isn’t going away anytime soon, nor should it. It’s an important revenue stream for labels and acts and without it, or some new revenue stream that’s comparable, popular music of the future will become a shell of what it once was. It’s already happening now: Fewer big name acts with more limited sounds sponsored by big labels. Meanwhile, there’s no good aggregator for all those unsigned and small label acts that the internet has given a venue to. It’s becoming either “enjoy the increasing limited pallette on the big labels” or “go get lost in the sea of indies.”

      • I have no emotion on the subject of CDs dying. Your argument that they may survive is based on their superior bit-rate. But while Neil Young’s Pono is no horse I’d bet on, it’s clear that streamable formats will improve to a level acceptable to the most discerning audiophile. And bandwidth will increase to carry those signals affordably. So again, it becomes a question of when, not if.

        • Moses Avalon says:

          Dude… everything is a question of “when.” I mean, someday everything will end when the sun goes Nova, right? The real issue is if it will happen within our productive lifetimes– effectively the next 15 years or so. I say no. You say yes. We’ll see.

          “Your argument that they may survive is based on their superior bit-rate. ”

          Ah no, actually. You need to read past the first paragraph of my response. My argument is based not on bit rate, but on cost. It is simply cheaper to buy CDs (or files)than it is to continue to rent music month after month after month and pay for the necessary mobile bandwidth.

          As I wrote, people will likely do both. They will subscribe to a streaming service for discovery/shopping, the way they used to use radio, but they will also likely want some form of ownership media. That may be a CD, or maybe a FLAC/Lossless file. Only time will tell.

          The better peoples stereos get the bigger the need to ‘own.”

          • Sean Stubbs says:

            “As I wrote, people will likely do both. They will subscribe to a streaming service for discovery/shopping, the way they used to use radio, but they will also likely want some form of ownership media. That may be a CD, or maybe a FLAC/Lossless file. Only time will tell.”

            Yup. Absolutely, Moses. That scenario seems the most likely. For the foreseeable future, anyway.

          • Matthias D says:

            I like to discuss about this :)

            Let me add some fuel right here. Maybe nothing will be gone and first things will become different and second than everyone (most people) think. As always. Let me paint a different scenario: what will pass sonner or later ist the tech mopdels, websites and technology first and foremost!! Now it’s maybe still spotify, tommorow who knows. But the guys with the big checkbooks will always try to get in. And the guys with the creative ideas will the one that get milked. Mos definitely. As always.

            Mp3 wont be gone, who would delete them? Maybe theyll be forgotten or lost someday one million sof harddrives but gone? No. Streaming services nevertheless will change. And availability will increase. But those wont include true dedicated indie alternative DIY giveafuk artists. Countercultures (aka tastemakers) wont starve to death, but already go underground IMO. As always when shit hits the fan. Corporations and investors money tend to mess things up. As always. You might wanna bet on it and mess with it.

            And take a closer look: people who give a damn about those corporations and love the music, the real fans and collectors, they switch over to the vinyl side again. Why? Because digital means you aint got shit. Especially mp3. The more ppl realize itunes ets is just a license, not a “thing” you get, the more will become disalienated because they feal cheated. Bottom line for them will possibly be: we aint gonna take it anymore!!! And the corporations will be even more like:
            ok lets milk the rest of them even more!

            So here we go: tech is changing. As always. And it only becomes clearer who’s a music consumer and who’s a collector. “Collectors” will want to own something, something physical, not digital. Some DJS etc will find it more practical to use CDs instead of vinyls, some folks because they dont need as much space or b/c they want to own s/th and also listen to it in the car. But “Consumers” will care mostly about availability and practical minimalism. And that means: the best for them would be a streaming service like spotify available in their car, on their walkpod, the radio at work and at home. All and everything everwhere. For 9.99. These guys really want music like water.

            And btw Mo, great article, as always. Cheers.

  4. Andrew Behla says:

    Thanks for a great post, Moses. It is an interesting read, and as always I can count on you to bring the latest news to light. I wasn’t familiar with MOG but just signed up and can hear the quality difference in comparison to spotify.

  5. Ol Goob says:

    Great article and great discussion between Mr. Avalon and Mr. McAlevey. Thank you Mr. McAlevey for weighing in. My .02 as a 23 year vet in the biz: there are 3 types of people; 1) People who listen to music as an activity, 2) people who have music on while they do stuff and 3) people who do both. Currently appox 90% of money spent on music is for type 2 folks. When only 10% of the listeners want something, no one will be in a rush to give it to them. When the biz offers a product that is consumable in a ‘listen as activity’ way (yes, like albums used to be), you will see a rise in the desirability of ownership. Until then, discussions about renting, streaming, ownership and sound quality serve to attempt to wag the dog. IMHO of course. And I chose MOG over Spotify cuz of their commitment to micro niche music styles and independents, not sound quality or accessibility. Reckon I’m in the 10%, eh?

    • Moses Avalon says:

      “When the biz offers a product that is consumable in a ‘listen as activity’ you will see a rise in the desirability of ownership.”

      I wish i could figure out what that meant so i could respond.

      1) By “the biz” who would you be referencing? Labels/publishers? Hardware/software companies? Streaming services? Gaming companies? “The Biz” is going through a massive redefinition.

      2) By “product” do you mean the music itself or a new device/medium?

      3) By “consumable” do you mean listening or did you have something ellse in mind?

      • Ol Goob says:

        And to specifically answer your points….1) the biz is anything that is involved with the production and sales of artist based music. 2) The Product in this case is the the consumable that creates the ‘experience’ of listening to the music. 3) and consumable means purchasable.

  6. Ol Goob says:

    I understand your point. As a muso, I’ve had to have my hand in every part of the music biz to make the mortgage. The opportunities to do what I’m doing weren’t there in the 70′s. But the current delivery models of artist based music product, while offering an opportunity to ‘listen’, also offer ubiquitous anytime/anyplace listening that is non dedicated. Instead of a sit down meal, it’s a stick of gum you can chomp while doing anything. When someone, comes up with a way to re start the ‘listening as activity’ consumable, you will see a rise in desirability of ownership. And while I agree with your “ownership desire will increase with age” paradigm, I also feel that we need something delivery wise, that INSPIRES people to listen as a dedicated activity.

  7. re: “And soon mobile broadband really will be ubiquitous.”

    Don’t hold your breath.

    • Moses Avalon says:

      I must agree. People often forget that it took 12 years to make a CD player standard equipment in a car and it took cable-TV 15 years to become what we would now call ubiquitous. It’s easy to feel, when you are in a major city in America, that things like broadband are to be expected everywhere. But the reality is that more than 50% of the world does not have broadband, and due to political considerations, is not likely to get broadband for sometime to come.

  8. Hi Moses,

    Yes, mobile broadband is far from ubiquitous. And, until phone companies figure out how to get mobile streaming in underground subways, music services like MOG and Spotify will have their limitations in major cities as well.

    But even if in the near future mobile broadband is everywhere, that doesn’t mean it will be free, or more cost-effective vs. buying the music outright. Phone companies are already beginning to charge their heaviest mobile streamers a monthly premium of $10-$40. Coupled with the $10/month charge from a music service, subscribers will begin to see that their “unlimited music anywhere” plan is costing them $50/month.

    The now-defunct company Beyond Oblivion saw this coming and tried to marry the mobile phone companies with the labels, to no avail. From what i gather, it was just too ambitious a plan for today’s world.

    So i’m wondering…In your opinion, do you think consumers who will spend $50/month on “streaming music everywhere” will care that $40 of it is going to a phone company? Pre-internet, I would think $50/month is about what the average music consumer spent on music, and at least that money was going to the music industry. Or, will the pendulum swing back in favor of owning music outright and using a non-streaming mobile device? Personally, i hate spending more than 60bucks a month for my cell phone services and i have 0 songs on my phone.

    • Moses Avalon says:

      Well Mike,

      You are asking all the right questions. For the answers you’ll have to wait untill i publish part two and three of my seris called, Will Music Streaming Kill Muisc For Good. Do a serch in the serch fuction above for that title for more.

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