The New Era of Music Apps: Subscription Services

At the end of last week, last.fm suffered an outage that lasted up to 24 hours. In her report on the story, ReadWriteWeb’s Sarah Perez noted that she no longer uses online radio services like last.fm and Pandora. Instead, she’s "moved on to bigger and better things" in the form of new subscription-based services like MOG, Rdio and Spotify. There are others, including long-time subscription service Rhapsody and the hip Grooveshark (popular with RWW readers).

For the purposes of this post, we’re going to focus on the 3 new kids on the block – MOG, Rdio and Spotify – and look at what makes them so compelling. Firstly, you may be wondering what exactly is the difference between MOG and last.fm, or Rdio and Pandora?

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There are two main aspects of MOG, Rdio and Spotify which are driving up usage of those products:

1. "iTunes in the Cloud" – in a nutshell, you can listen to entire albums and choose specific songs on MOG, Rdio and Spotify. It’s very similar to how people use iTunes, but these new services are online apps. In addition, the new breed of apps have features such as downloading songs and curating social playlists.

By comparison, last.fm and Pandora are "online radio" services – a stream of songs that you have little control over, other than to play songs similar to a certain artist or tag.

2. Subscription model. We discussed the importance of subscriptions in yesterday’s analysis of tablet magazines and newspapers. Apple is proving to be a troublesome middleman in that market, but in the online music business apps have been able to route around iTunes. MOG, Rdio and Spotify all rely on $5-10 per month subscriptions to make money – although Spotify offers a free, ad-supported version too.

For consumers, the advantage of subscriptions is being able to access whatever music you like online – as long as it’s in the catalog of those apps. MOG has an estimated 10 million tracks, compared to Rdio’s 7 million. Mobile devices are a big part of this trend, but it’s not limited to that. Recently MOG and Rdio announced plans to connect you to your music in the car and home.

There are of course some differences between the 3 new kid apps. For example, MOG has a large music content network called The MOG Music Network (MMN), Rdio offers a slick sync with your iTunes catalog and Spotify has premium offline functionality.

Despite the fascination for these new online music apps, there is one big gotcha: many people have limited or no access to them, due to outdated copyright laws. Most international users cannot use MOG or Rdio (or at least have limited access), while U.S. and non-European countries cannot use Spotify.

Personally I have zero access to Pandora and Spotify and have limited MOG access (I can’t download the MOG iPhone app, but I can listen to MOG on my desktop). My staple over the years has been last.fm – which I like anyway, but it helps that it’s the only online music service I’ve been able to consistently access.

I like the serendipity of last.fm, although I’ve started to use MOG now to listen to entire albums or specific playlists online. Note that you can scrobble your music data to last.fm using MOG or Rdio ("scrobble" is last.fm terminology and means to track what you listen to via an online database).

Let us know in the comments which online music app(s) you use the most! You can also check out the responses to this question on our Facebook page or via Twitter.

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