How Last.fm Will Create “Communities Around Content”
Earlier this week we reported that leading online music service Last.fm, owned by CBS, had gotten major labels on board for its new streaming music services. Users will be able to stream full-length tracks from the likes of EMI …
Context & Ripple Effects
CBS paid $280 million for Last.fm in 2007, and GigaOM framed the deal at the time as a hedge for its radio business — a way to buy the listening-habits graph that terrestrial playlists could never offer. The service had already pushed beyond scrobbling into video that spring, positioning itself as the MTV of the Web 2.0 age. What it lacked was full-length, licensed music — and mid-2007 coverage even questioned whether its model would survive legal scrutiny.
This week's news closes that gap: the major labels, including EMI, are officially on board for full-track streaming. The timing matters because the majors just endured what coverage described as a terrible year, with worse expected — EMI has already stripped DRM from its catalog, and rumors were circulating (unconfirmed) that it might pull funding from trade groups like the RIAA. Licensing a community-driven streaming platform is one of the few growth moves left on the table.
First-order effects
- Users get free, full-length streams from EMI and other majors inside Last.fm's existing social layer, turning the site from a discovery-and-preview tool into a de facto jukebox.
- The labels gain an ad-supported revenue channel built on declared listening data rather than sales figures — and Last.fm's open licensing question from mid-2007 is answered by contract rather than takedown.
Second-order effects
- Every competing music service now needs comparable label deals to stay credible, pushing licensing fees upward and making catalog breadth the entry ticket rather than the differentiator.
- CBS gets a measurable test of whether online streaming audiences can offset radio's decline, validating or killing the 'digital hedge' logic behind the acquisition before it spends further.
Third-order effects
- If the majors keep signing ad-supported streaming deals while download sales slide, the industry's center of gravity shifts from owning copies (with or without DRM) to renting access — with whoever holds the listener data, not the file store, capturing the value.
- Community signals like scrobbles become a bargaining chip in label negotiations, formalizing the idea that listening behavior itself is licensable inventory alongside the tracks.
The trend: Recorded music is pivoting from DRM-protected downloads to ad-supported streaming platforms whose community data, not their catalogs, is becoming the competitive asset.