Social music site receives funding from record labels

By Ed Oswald | Published April 30, 2008, 2:33 PM

Social networking site MOG said Wednesday it had received an additional $2.8 million in funding, some of it coming from Universal Music Group and Sony BMG.

The site has around a million unique users a month according to company statistics, and promotes itself as a destination for music enthusiasts to discover new music and connect with others who may have similar music tastes.

MOG was founded by 2005 by former Gracenote CEO David Hyman. It is that connection which may have helped the site attract some of the funding: his former company was just scooped up by Sony (half-partner in Sony BMG with Bertelsmann) for $260 million.

Some of the more skeptical among industry watchers are pointing out some interesting facets of MOG's technology that may be of interest to the labels, however. In order for the software to work, MOG scans your hard drive for music files to recommend to others.

It is here where the funding may make some nervous. While scanning the hard drive, it could be construed that the technology may begin to look for unlicensed files, This info may then be used in turn for legal action.

That may all be a bit of paranoia, however. In recent months, the labels have become more open to partner with startups to freely stream their music catalogs. It may be in the best financial interest of these labels to not press for such a use of the technology.

Also, in a struggle to stay relevant in an increasingly digital music world, such a partnership may help to strengthen the industry's online bona fides.