Digital music's next frontier

The next frontier for digital music is not a tablet or a smartphone, but two items that have been part of everyday life for decades: the car and the television set.

For years, digital music has been confined mostly to traditional computers and phones. But that limitation is slowly disappearing as the market shifts toward cloud services, which stream content from remote servers, allowing anything with an Internet connection -- like smart TVs or Blu-ray players -- to become portals for vast libraries of entertainment.

One music streaming service, MOG, is counting on this change to draw new subscribers and help it stand out in a crowded field. The company is hammering out a string of deals that could introduce it to millions of potential new customers. LG, Samsung and Vizio will incorporate MOG into their Internet-ready televisions and other devices, and the service will become available on Sonos, a wireless system for managing music throughout the house.

And in what the company calls the first integration of an on-demand music service into a car, MOG will also become part of BMW's Mini line. (On-demand streaming, unlike radio, lets you pick the songs you listen to.) More such deals are on the way, said David Hyman, MOG's founder.

"When you are thinking about buying into a cloud-based music service," Hyman said, "I imagine you asking yourself, 'Can I use this on my phone? Can I use it in my car? Will it work in my new TV?' The value of these services goes up the more places consumers can access you."

MOG, based in Berkeley, was founded in 2005 as a social networking site. It changed in late 2009 into a subscription streaming service, offering 10 million songs at rates of $5 a month for music on PCs alone, or $10 for additional access through mobile devices. On new TVs and home theater systems, MOG will be a preinstalled feature, and in the Mini it can be activated by plugging in a smartphone. (MOG users paying $5 will get access through their TVs, but the $10 subscription is needed for Sonos and the Mini.)

Unlike MP3s, which a customer buys once and then possesses, music accessed through the cloud needs constant contact with the service that provides it, which means the service must be available everywhere its customers spend their time. And if you're looking for ubiquity, the first places to go are the living room and the car -- both of which, analysts say, represent huge untapped markets for digital music.

"I don't think anybody in the music industry quite grasps how much of an important opportunity lies in the living room," said Mark Mulligan, an analyst at Forrester Research. "And the window for that opportunity is closing ever more as every year goes by."

In many homes, the Internet-ready television, preloaded with streaming services like Netflix and Pandora, is fast becoming a multipurpose entertainment hub. Sony has recently introduced its Qriocity service, which offers streaming music and movie subscriptions through Sony's connected devices like televisions and PlayStations.

"Home theaters and Blu-ray get a lot of attention when it comes to playing movies or TV shows, but music is a critical feature for those devices too," said Matthew Durgin, the head of smart TV for LG Electronics in the United States. "In a lot of cases we put the highest-quality speakers in the living room."

For subscription music services, the competition is intense and the rewards so far have been small. In addition to MOG, the field includes Rhapsody, Rdio and the remade Napster. Spotify, a European service, is expected to enter the U.S. market this year. But relatively few customers have been willing to pay for streaming music.

Apple and Google are also working on cloud-based music services, but they have been mum about their plans.

Hyman says he believes the car, where people do a majority of their listening, could be digital music's biggest opportunity by far, capable of attracting millions of new subscribers. Pandora, the Internet radio service, is already in many cars, including the Mini, and 20 million subscribers pay for satellite radio from Sirius XM. But so far on-demand music has been unavailable.