Last.fm tries the subscription model

by Mathew on January 23, 2008 · 8 comments

For a Web company, the downside to getting acquired — as Last.fm was by media giant CBS last year, for $280-million — is that you have to actually start making money, and that means coming up with a business model that will satisfy the guys in suits. I think that, combined with the lame demands of the major music labels, explains a lot about the news out of Last.fm about their new subscription service.

The upside of the new features? Music from all four of the big record companies will be available. The downside? You get to stream songs just three times — accompanied by advertising, of course — before you get the corporate “up-sell” offer, in which Last tries to convince you to pay for the subscription version of the service, which apparently features unlimited streaming (no word on downloads).

As Adam Ostrow at Mashable notes, the advertising-supported streaming is similar to the model used by Imeem. But will Last.fm really be able to make enough from that approach to pay the labels for every stream? Colour me skeptical. I don’t know exactly how much the labels charge for a stream, but I’m betting it’s a lot. The other question, of course, is whether subscription-based streaming will work at all — if I were Rhapsody or Napster I’d be worried about Last.fm eating into a market that doesn’t show much sign of actually growing, last time I looked.

Note for Canucks:

You’re out of luck. It’s available in the U.S., the UK and Germany (why Germany?), but not the Great White North.

  • http://broadcasting-brain.com Mark Dykeman

    Not only is Last.fm paying the labels for the rights to use the music, they're also paying the artists a share of the ad revenues, DIRECTLY.

    Maybe they have a sweet ad deal to afford this. I suppose it's worth a try, but the only thing that this does is make limited streaming legit and I'm not sure how you could legally get the music to your iPod. On the other hand, I do believe that Last.fm is oriented towards someone using a laptop or PC, which should make the iPod unnecessary for this model.

    It's also OK if you don't have any favorite songs.

  • http://www.changemod.com robojiannis

    I find the downside not so bad. Compared to the upside at least. Last.fm is a music hub and providing such a service is surely a big step. They didn't say anything about the labels' income percentage, but I like to be optimistic on that one.
    Downloads would be great, I agree. Don't see it happening, though (unless last.fm prints its own money)

  • http://www.robertdall.com Robert Dall

    Not that I used Last FM – but I am getting tired of the this great new service, but not in Canada.

    Dam it I want my iPhone (un jail broken too. . .)

  • Pingback: neunetz.com » last.fm: free on demand Musik (dreimal)

  • wyly

    Napster has been doing this for over two years at free.napster.com and Napster offers so much more it's amazing anyone even writes about this. Grow up, people. Music has value and artists and IP owners deserve to be compensated. Napster and Rhapsody offer an amzing value with their subscription services and all these new so called business models like last.fm, imeem, spiralfrog, ruckus are a bunch of crap compared to what Napster offers.

  • http://www.technovia.co.uk ianbetteridge

    Well first of all, Last.fm IS compensating the artists, with a proportion of the ad revenue going directly to them. Yes, you're correct that Napster has been doing this for years – but the free.napster.com service hasn't expanded beyond the US, which means that huge markets for music aren't being served. I suspect this is because Napster has never actually worked out how to monetize it.

  • wyly

    Napster has been doing this for over two years at free.napster.com and Napster offers so much more it's amazing anyone even writes about this. Grow up, people. Music has value and artists and IP owners deserve to be compensated. Napster and Rhapsody offer an amzing value with their subscription services and all these new so called business models like last.fm, imeem, spiralfrog, ruckus are a bunch of crap compared to what Napster offers.

  • http://www.technovia.co.uk ianbetteridge

    Well first of all, Last.fm IS compensating the artists, with a proportion of the ad revenue going directly to them. Yes, you're correct that Napster has been doing this for years – but the free.napster.com service hasn't expanded beyond the US, which means that huge markets for music aren't being served. I suspect this is because Napster has never actually worked out how to monetize it.

Older post:

Newer post: