Last.fm Launches Free Music Service
Social music site Last.fm, owned by CBS Corp., has launched what it describes as the world’s biggest free music service. This new service will be funded by advertising and affiliate revenue, which is shared with the music companies.
According to BBC, the launch is made possible by a partnership with the four major record companies, as well as more than 150,000 independent labels. The site plans to offer access to the labels’ complete catalogues. The move comes nearly six years after Last.fm first started reaching out to music companies to license songs for streaming on the internet.
"They wouldn’t even take our calls back then," Last.fm co-founder Martin Stiksel told Reuters.
"But our motto to always do the right thing by respecting artist copyright has helped us in our discussions," he added.
Users will be able to listen to any track, from any artist, streamed rather than downloaded, for up to three times. After that, they will be encouraged to purchase the track via iTunes and Amazon and other download services
A source familiar with one music label’s negotiations with the network told Reuters that because Last.fm is now backed by a major Media Company like CBS, it gave it a "leg-up" in discussions, compared with other start-up digital music companies. Last.fm, founded in London in 2002, was bought by the American media giant CBS last year for $280 million.
Richard Jones, one of Last fm’s three founders, told the BBC: "We want to make music available free and legally to whoever wants it, while rewarding the artists at the same time."
Asked whether users wouldn’t rather own the music and be able to put it on a portable player, rather than just being able to stream it, he said: "The way people consume music is changing – sometimes you just want to listen to it there and then."
London-based Last.fm has more than 15 million active users in over 200 countries. And according to Reuters, has until now been best known for its song-recommendation system, which tracks users’ music-playing habits and link them to other fans with similar tastes.
Users of the site also build communities or networks around their favorite artists, similar to those seen on social networking sites like Facebook and MySpace.
Free music streaming or Internet radio sites have had varying degrees of success in obtaining affordable licenses from music companies. The sites, typically small start-ups, have also been burdened by hefty royalty fees payable to the music industry both in the U.S. and in Britain.
Stiksel told Reuters that Last.fm’s primary role as a music community site has meant that it typically has a higher number of page views than a pure Webcaster such as Pandora. Earlier this month, Pandora said that it would be closing its U.K. service due to high royalty fees.
Typically, a higher number of page views by a Web site’s users would usually mean more advertising revenue. CBS has said it hopes to build new communities for online videos with Last.fm that will include its own archive of hit shows as well as non-CBS videos.
According to BBC News, this is just the latest attempt to find a new model for an industry struggling with falling physical sales, while concurrently attempting to earn money from online music.
Spiral Frog, launched last year, is 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 told BBC that may be because users are forced to listen to an advert with each track, whereas his service will be supported by banner advertising.
Last.fm is launching its on-demand service in the US, UK and Germany immediately, and plans to roll it out globally over the coming months.
The big record labels will be watching closely to see how great the demand is for streamed music and how many of the customers then go on to pay for downloads.
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