CBS Buys Last.fm

I just did a search on my blog for the term "last.fm". I’ve used that term so many times that there are 16 pages of search results and that’s just for my blog posts. Clearly I’ve been obsessed by this service from the day I started using it in the fall of 2005.

And there are so many reasons why. First, last.fm was the first streaming audio service on the web that wasn’t traditional internet radio that really grabbed me. When I first starting playing neighbor radio, I couldn’t believe how good it was. The concept is simple. If you knew all your musical neighbors and could listen to a stream of music that they are listening to right now, you’d have an amazing radio station. The people who have musical tastes closest to you are in effect the DJs. I’ve listened to my neighbor radio at least once a week for the past 18 months and never get sick of it. When I turned it on this morning, the first song was Very Loud by the Shout Out Louds. I love that song and have never ever heard it on traditional radio.

But there’s more. Last.fm was the first service that allowed me to spy on myself, to actually tell me what I was listening to. Here’s the list of the artists I’ve listened to the most since I started using last.fm in the fall of 2005. Here’s what I’ve been listening to this week. Data like that was never available to me (and all of you) before last.fm.

And there’s the social networking that’s available on last.fm. I’ve met new people, been turned onto new artists, and heard about shows to go see on last.fm. The filter is the music we love and that’s a pretty great filter.

So I am writing all of this as a prelude to talking about the news that CBS has purchased last.fm for a reported $280mm. That’s a big number but I think it will go down as a smart buy. I think streaming audio is fast becoming the best way to listen to music over the internet. A year ago, file based music (meaning iTunes) was at least 2/3 of my listening activity. Today, it’s about 1/3 and going down. I use the following streaming audio services for the majority of my listening; rhapsody, last.fm, hypemachine, blogs, and streampad. I know that I am out there on the edge and that most people still play mp3s on their iPods and laptops.

But I bet that’s going to change over time. Because all the music you want to listen is available for streaming over the net. You just have to find it. And last.fm helps you find it with services like neighbor radio and similar artist radio. Radio can be monetized whereas files are free, at least to most of the youth generation. And that’s just not going to change.

We’ve already made one bet on this trend with our investment (with CBS coincidentally) in TargetSpot. TargetSpot was built to monetize streaming audio, meaning traditional radio streamed over the Internet and new forms of radio like last.fm and the others I mentioned.

That’s where the $280 million purchase price comes in. That’s a bet that more and more people will start discovering and listening to music over the Internet. And it’s a bet that those page views and streams can be monetized. I think they can and they will. So I think it’s a smart bet that will take some time to pay off. But like MySpace, this buy may look very cheap in a couple years.

I’ll finish with the playlist that I heard on Neighbor Radio while I was writing this post:

Very Loud – Shout Out Louds:
The Boy With The Thorn In His Side – The Smiths
Looking At The World From The Bottom Of  A Well – Mike Doughty
A Shot In The Arm – Wilco

You can’t get that on traditional radio. I can’t even do that well programming my own iPod. I love last.fm and I am really happy that it found a great home at CBS.