Last.fm recently announced that users from countries that aren’t the USA, UK, or Germany will be required to purchase a paid subscription account to use Last.fm’s streaming radio service – while the cries of Internet Racism have been funny (note to Canada, France and the rest of the third world : ad revenue from the States is subsidizing other users, not the other way around), I’m much more interested in how casually people have been willing to throw away the time they’ve invested to move on to a cheaper (read: free) alternative.
I’ve always had to wear two hats when it comes to commerce online. While it’s really easy to demagogue last.fm because they’re a corporation acting corporation-y, the fact of the matter is that we’re in a global recession – advertiser money is not exactly flowing like wine right now, and there are a lot of real world expenses involved with putting out a worldwide streaming radio thingamabob – bandwidth isn’t free, and record labels are still in their distressing old world mentality when it comes to royalties (hey, does anybody remember when radio was Free Promotion and labels busted ass to get exposure for songs? OK, me neither).
But in the same way the free market is completely amoral when it comes to the laws of commerce, it’s also amoral on the other end – that of user choice. How many internet companies have made the mistake of thinking brand loyalty means anything on the internet?
CBS, last.fm’s parent company, has done this before. Remember Yahoo! Launchcast? It was a lot of people’s first experience with programmable internet radio – you plugged in your favorite bands, and it spat out a streaming radio channel at you. It was a very cool idea. But once the forces of commerce stepped in, things got progressively lamer – first you couldn’t run the thing on any decent browser, then there were so many intrusive ads it felt like there was one after each song, and eventually CBS bought it and customization – the one thing that kept it worthwhile – got the axe, replaced by a bunch of pre-programed stations with forced commercials you cant even pay to get rid of. Some users spent almost decade meticulously crafting a custom station. Poof. All gone. Is Yahoo’s user base going to forget that if they want preprogrammed stations with commercials in 2009, they can check out this thing called a radio station? Nope. They never do. There’s always a Pandora/Slacker/Musicovery out there ready to pick up the scraps when a larger company like Yahoo decides to Go Premium and stop delivering what their users are interested in. The dustbin of internet history is filled with companies who had a really good thing going, but tried to monetize when a competitor was out there doing the same thing.
And while it might not be totally fair, Last.fm is in the same predicament. CBS has helped them with visibility, but what makes their site special isn’t some fancy server playing the entire history of recorded music, it’s the tags users have added, it’s the recommendations, the eyeballs that spend hours reading the site and getting their friends on the service, the play data their members gleefully hand over to the company. It’s tastemakers – musicians and webmasters who draw eyes to their own creative projects and treat Last, Twitter, MySpace as extensions of those projects – who often get people to take the leap and sign up for a service. Maybe users in the US, UK, and Germany have scraped up the revenue to be self-sustaining though advertisers, but people outside of those countries are likely going to start feeling like second class citizens when they can’t hear full song previews and have to pay for radio – and in terms of data and community, they contribute as much as anyone else. 3 Euros is equivalent to 20 US dollars or more many places in the world, especially Latin America, and it’s tough to justify spending that much money on anything when a free alternative is out there.
They’re gone, and it wouldn’t have mattered if you charged them 5 bucks or a quarter. Free is free and free wins, just like cheap Chinese labor wins. It’s tough to ask businesses to run a multimillion dollar service for free, and it’s certainly not sustainable (Enjoy Hulu while you can, y’all), but when there are so many other companies willing to soak up the loss for a chance at winning the Internet Lottery, it’s a difficult minefield to navigate – Google and eBay are the exception and not the rule. From a business perspective, last.fm will be fine – their ties to CBS will probably get them lots of access and cute tie-ins and users that stay out of habit (and if they’re smart enough to keep it free for American users, that’ll be a nice chunk). The users will slowly go to a place like Spotify or FineTune if the feature sets a little larger, until eventually Spotify realizes that it costs money to run a business and some guy in a suit convinces them it’ll be a great idea to Go Premium!
last.fm?
Are you sure?
It’s happened before. It’ll happen again.
Tags: FineTune, last.fm, Spotify, subscription model, Twitter