Jim Carroll

Music, Life and everything else

MySpace looks a bargain after CBS deal

If you’re one of the 15 million people who have been using the Last.fm online music service to discover new bands and tunes since 2002, it may be interesting to know that you’re worth just under $20 (€15) to the …

Fri, Jun 8, 2007, 14:11

   

If you’re one of the 15 million people who have been using the Last.fm online music service to discover new bands and tunes since 2002, it may be interesting to know that you’re worth just under $20 (€15) to the company.

Last week, US media giant CBS Corporation splashed out $280 million (€207.2m) on the online network where music fans build personalised radio stations and get recommendations on new acts based on their own musical likes.

Based on the per-user spend, it makes the $580 million (€429.3m) paid by Rupert Murdoch’s News Corporation for the MySpace social networking site in 2005, which had 54 million active users at the time of the sale, look like a bit of a Web 2.0 bargain.

However, what’s interesting about the Last.fm sale is not so much the size of the deal, but who’s doing the buying. Like the News Corporation swoop on MySpace, the CBS/Last.fm deal shows that old media groups are willing to take an online punt to protect their necks from new economic and social realities. That CBS, the largest radio group in the US which has considerable interests in TV, see value in Last.fm’s social network is hugely telling.

Of course, the fact that Last.fm has built up its user base and value on the back of music should not be lost on anyone, especially those whose job it is to make money for various record labels.

Yet again, it shows that the record industry’s initial failure to engage with technology and telecommunications companies will turn out to be a costly one. By not getting on side and working in tandem with the tech turks at the outset, the industry lost the initiative and, worse, the goodwill of all involved. It should have bought lunch, instead of sending in pin-striped legal eagles clutching cease-and-desist letters.

This failure to take the lead is something Last.fm co-founder Martin Stiksel hinted at when speaking about the deal. “When we started in the dire days of 2002, no-one wanted to put any money into online music because Napster had just been sued into submission.”

Five years on, it’s a different story. Last.fm will not be the last big-bucks deal involving online companies who’ve built their customer-base and value using music. Just a pity the same can’t be said of the music companies.

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