Last.fm Jumps On The On-Demand Streaming Bandwagon

I’ve been saying for as long as anyone would listen to me that one day all the music ever recorded is going to be on the Internet and we are going to have sufficient bandwidth and connections on every possible listening device and at that point file based music is going to be history. I’d go back and find all the posts I’ve written on this topic but it would fill up the whole front page of this blog. I believe this with all my mind, heart, and soul.

We’ll have a bunch of ways we can listen to this music.

We can listen in "radio" mode where we tune into some kind of DJ and we let them play music for us. This largely exists already. You can listen to Radio Paradise which is exactly what it sounds like, you can listen to last.fm neighbor radio (here’s mine), and you can listen to hype machine’s popular list. The services I’ve listed here and many others pay the compulsory streaming radio license to soundexchange or directly to the various rights holders.

Or we can listen on-demand meaning we pick the music we want to play, either song by song, album by album, or via building playlists. These services pay a royalty to the rights holders of $0.01 per song and to date have funded those payments by charging a monthly subscription of between $5/month and $15/month. The leading on-demand streaming service has been Rhapsody which I’ve advocated for years, particularly when combined with an in-home device like Sonos. There are others in this market like Yahoo! Unlimited (which is rumored to be leaving the subscription music business) and Napster (the new Napster). I have heard that none of these services is profitable, but I could be wrong about that.

Last.fm announced today that they are offering their own on demand service. They are pushing the envelope with this service in two important ways. First, they are allowing anyone to listen to three free plays of any song before they have to become a subscriber. Second, the monthly subscription is $3, much lower than anyone else (at least to my knowledge).

Will I switch from Rhapsopdy? Not yet. I’ll probably add a subscription to last.fm’s service for two reasons. First, I believe in paying for music. This money will go to the artists (at least for unsigned artists who put their music on last.fm). Second I might want to listen to a song more than three times on last.fm and I’ll need a subscription to do that.

But right now Rhapsody works on Sonos and last.fm doesn’t. Since we do most of our Rhapsody listening on Sonos, that’s a good reason to stay on Rhapsody even though it’s 3-4x as much as last.fm.

It appears that last.fm is planning on paying for the on-demand royalties through a combination of advertising and subscriptions (that’s why the subscription is lower). That’s certainly a step in the right direction.

In my vision of a pure streaming world (which I outlined in the opening paragraph of this post), we’d have a third option. Which is fully ad supported on-demand listening. It’s too bad that last.fm can’t go all the way to free (they are getting close). Because until on-demand listening can be supported entirely by ads, I don’t think it will be a mainstream service. It’s still possible to get music for free and many people choose to do that instead of paying for a streaming subscription service.

I do think that paid and ad-supported/free can co-exist in the market. It works in radio where some are willing to pay for XM and Sirius while most are happy to get some ads and not have to pay for their radio.

I hope last.fm will consider offering a totally free on-demand service supported by in stream advertising (supplied by targetspot of course!). I think that’s something that the market would really respond to.

I’ve been beta testing a service called Spotify that I can’t talk much about other than to say it’s another on-demand streaming service and it’s very good. I hope they’ll have the courage to try the free/ad-supported model in addition to the subscription model.

Back to last.fm’s announcement today, there’s one thing I really wish they’d have done. I’d like them to offer embedding an on-demand player on blogs and social net profiles. If you click on this link to last.fm, you can listen to Vampire Weekend’s song, Cape Code Kwassa Kwassa, which I like very much. But I don’t really want to force you off this page to hear the song. Instead I could upload the mp3, like this – Cape Cod Kwassa Kwassa – Vampire Weekend. If they offered an embeddable player, that allowed anyone to listen to a song, monetized by audio ads after the song and before the next song, I would stop uploading mp3s and start embedding the last.fm player.

If they don’t do it, someone will. Because it’s the logical next step in the streaming audio game.