On February 15, the radio service built into Last.fm mobile apps and on home entertainment devices will become an ad-free, subscriber-only feature.
(Via Last.FM.)
$3.00 per month is not an outrageous amount of money for an ad-free radio station, but it’s still too much for most people. People have too many other options (legal and illegal) and they don’t want to pay for radio. And it has nothing to do with file sharing–radio has always been free.
The winning strategy for online radio is very simple: free ad-supported streaming on all devices, and a premium service that allows people to pay for ad-free music. Terrestrial radio has worked on this model for 100 years, so why can’t anyone figure out how to do it online? One problem is, ads are cheaper online than they are on radio or in print. This is a failure of the content owners. It shouldn’t be that hard to convince businesses that online ads are more targeted and more effective. When you buy an ad on a terrestrial radio station; you don’t know how many people heard it, and you know very little about the people who did. Online, you know exactly how many people heard it, and more importantly, you have lots of information about them. It’s only a matter of time until advertisers realize this, and when that happens, ad revenues will be much larger online. Unfortunately, that is only half the problem, and it’s the easy half.
The biggest issue is the expensive and inflexible music rights. The music industry is still more interested in fighting for the return of the old model, than they are in embracing the new one. Last.FM should have been a profitable partnership for record labels, and they’ll regret this day.
As for Last.FM, they are now irrelevant in the streaming game, and have to survive on their social and curation services.
