Web services like Last.fm are hard pressed to find ways to monetize their inventory to even come close to the bills for the server structure, administrative and development teams, bandwidth and everything else that is connected to their service.This is especially true for services that stream media on their websites as this usually results in heavy traffic.
Last.fm have now announced that they will start a subscription based service for a large part of their user base which will go live on March 30, 2009. Users not living in the countries United States, United Kingdom or Germany will have to pay a subscription fee of $3 per month if they want to continue listening to Last.fm radio. All other parts of the website remain freely accessible for anyone.
Users not accessing from the three countries listed get a 30 track free trial before they cannot listen to the radio streams anymore unless they subscribe to the service. It is unclear if that 30 free track trial resets each month or if it is only available once. It should be made clear that this does not affect song previews or full tracks that are listed on the website.
Nothing will change as well for existing subscribers. The Last.fm blog post where the announcement got posted is full of criticism about the move. One of the main questions asked is why those three countries are exempt from the fee.
The reason is ad revenue next to a strategic decision which are considered key markets. Advertisement simply pays less if a user is from India, China or South Africa compared to users from the mentioned key markets. It is an economic decision, and while certainly bad for many Last.fm users, the only feasible move according to Last.fm to keep the service going.
It still remains unclear why Last.fm made the decision. Most users who expressed their opinion think that either the Recording Industry or CBS has something to do with it. If the Recording Industry was the culprit it is most likely because of licensing fees while CBS might want Last.fm to run profitable or at least even.
Update: Last.fm posted a followup on the announcement, and the company confirms what I thought was the reason for the change. Ads are simply not feasible in many parts of the world to cover the operations of Last.fm's radio offerings.
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Ghacks is a technology news blog that was founded in 2005 by Martin Brinkmann. It has since then become one of the most popular tech news sites on the Internet with five authors and regular contributions from freelance writers.