MOG Went For A Song. HTC Says Beats Paid Only $14M For The Music Streaming Service

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Yesterday, Beats Electronics confirmed that it was buying the music streaming service MOG. Today, HTC, which invested $309 million in Beats last year, revealed to its shareholders just how much was paid: $14 million — a song compared to the $4 billion valuation swirling around its competitor Spotify.

The note, first spotted by the blog Unwired View, is embedded on HTC’s investor relations site. It also confirms that the sale was only for certain assets belonging to MOG and have been made as a “strategic investment” through Beats subsidiary Daisy. As we reported yesterday, Beats has bought only the streaming portion of MOG’s business; the advertising and online network will continue as its own standalone entity.

The purchase is increasingly looking like a double-strategic move: on one hand for HTC to compete against Apple, Samsung and the rest with a killer music service of its own; and another for Beats/MOG to renew efforts versus Spotify.

HTC. As we noted yesterday, one big question around the acquisition is around how this might fit into HTC’s business: the company is already a shareholder in Beats and has been using it as part of its strategy to improve its service/content portfolio. (That strategy also includes a stake in OnLive, the cloud gaming platform that some believe may be in play, now that Gaikai has been bought by Sony.)

Yesterday, Beats explained that MOG would become incorporated into new, end-to-end services developed by Beats. That may see a full music service coming to HTC.

“[Beats] was never about just headphones,” Beats’ president and COO Luke Wood said yesterday in a statement confirming the deal. “We’ve… expanded the Beats mission to every other link in the music experience chain – speakers, mobile phones, personal computers and automobile sound systems. With MOG, we are adding the best music service to the Beats portfolio for the first truly end-to-end music experience.”

As I noted at the time of the original investment that HTC made into Beats on August 11, the idea specifically for Beats was to improve music quality and give HTC a stronger position against Apple with its iTunes stronghold. That position for Apple has now been bolstered even further by the fact that there is a strong catalog of iOS apps, like Spotify’s, that also offer compelling music experiences for the consumer.

For Beats, the bigger competitive threat is against Spotify. The U.S./Swedish company not only has a lot of cash — over $180 million in backing; on track to make nearly $900 million in revenues this year — but a lot of current and potential users, too. On its own steam, Spotify now has 10 million users, but a deal announced last week with Yahoo — in which Spotify will become the main streamed music provider to the Internet portal — could see that number ramp up significantly.

It’s got a long way to go, though. MOG has 16 million tracks but with its service only live in the U.S. and Australia (versus some 13 markets for Spotify), it is likely to be significantly smaller, judging by the price tag HTC has revealed.