CBS-owned social music service Last.fm today announced a switch from playing song snippets to providing free streaming music, a move backed by an ad-supported business model. All four major record companies have signed on, as have 150,000 independent labels, making Last.fm’s inventory of songs larger than that of iTunes. From the CBS press release:
Martin Stiksel, Last.fm co-founder, said: “We’re giving the listener free access to what is basically the best jukebox in the world. The ability to dip into such a uniquely broad catalogue from your laptop, home or office computer, and listen to whatever you want for free represents a new way of consuming music that in turn might change the way you listen to music. In that respect, nobody else can currently offer what Last.fm is offering right now.”
There are some drawbacks to the new model: no downloads, and users will only be able to play a single song up to three times. Then they’ll be prompted to join the company’s subscription service, details of which are still forthcoming. Also, the site will not require users to register but will likely utilize cookies to track user behavior and target banner ads, though the company remains mum about exactly how they’ll track.
The new model is being compared to social network Imeem, which only offers user-uploaded tracks, and SpiralFrog, which is supported by audio ads as opposed to Last.fm’s banners [according to a quote in the BBC, but see update below for correction]. It more directly challenges Rhapsody and Napster, two subscription-based streaming models that, as Mathew Ingram rightfully writes, should be scared. But what’s most interesting about Last.fm, and what makes it a potential challenger to MySpace, as Mashable notes, is that it also offers a perk to unsigned artists who can upload their songs and receive royalties every time a song is played.
What’s curious about this is that it sets up a very attractive distribution model for new artists that will undermine all labels in the long haul. Then again, the incentive to sign on with a record label in the first place was fast-fading thanks to MySpace, which has become a really successful self-promotional tool for artists. Last.fm sweetens the pot with money, though it’s important to note we don’t know how much artists will make for each stream. The labels need Last.fm in order to monetize now, but Last.fm is probably the real beginning of the end for the music industry as it exists now.
Update: SpiralFrog’s PR agency wrote to let us know that SpiralFrog does not use audio ads, just banners (and SpiralFrog’s FAQ only mentions “ads on our pages,” implying banners). We got the information about audio ads from a quote in this BBC article, which reads “Last year saw the launch of Spiral Frog, another free service supported by advertising. Unlike Last.fm, it offers free downloads but has failed to make a major impact. Mr Jones from Last.fm said that may be because users are forced to listen to an advert with each track, whereas his service will be supported by banner advertising.” We should have stated that SpiralFrog allows downloads and requires registration, whereas Last.fm does not. We regret the error.