CBS Asks: Where Does Last.fm Grow From Here?

CBS Corp. on Wednesday presented its highly ambitious vision for the global music business. Anyone familiar with Last.fm, the online community of musicians and fans that CBS bought last year, already knows what that vision looks like.

Trying to sell Last.fm as the biggest free, ad-supported music service online, CBS President and CEO Leslie Moonves took it upon himself to address members of the media, Madison Avenue and Wall Street.

"Community clearly is the future," Moonves said from Black Rock's Studio 19. "It is clear to us that communities built around great content are increasingly driving traffic and revenue online."

Through deals with Universal Music Group, Sony/BMG, Warner Music Group and EMI Group, among others, Last.fm is now offering full-length tracks and albums for a total of more than 3.5 million songs.

Last.fm, which CBS acquired for $280 million last May, offers users personalized track recommendations, concert updates and music videos based on which tracks they have listened to in the past. Using its "scrobbling" technology and reference engine, the site builds user profiles tailor-made for targeting advertising.

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Quincy Smith, president for interactive at CBS, said he is in talks with advertisers in sectors like autos, entertainment and pharmaceutical. Toyota was mentioned specifically by Martin Stiksel, one of Last.fm's co-founders. The site's main ad spot is a mini-billboard beside the album being played at the time.

What has long set Last.fm apart from rivals in the space like Pandora, MOG, and iLike has been its global reach, thriving community base and extensive relationships with major music labels--critical to avoiding rights-holder and copyright issues.

A serious limitation to the service, however, is the fact that users can only play a song three times--an inadequacy that Last.fm's executives concede and hope to change.

"We're not 100% happy with having only three plays," said Martin Stiksel, one of the site's co-founders. "We want more."

Users do have the option to purchase tracks from one of the site's partners, including iTunes, Amazon and 7 Digital.

The site also features an "Artist Royalty" arrangement, which gives unsigned acts a chance at exposure and a paycheck if users tune in.

The remodeled site, which went live in the U.S., the U.K. and Germany on Wednesday, is expected to make its worldwide debut in several months.

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