Last.fm Will Turn Down The Volume On Global Radio Services In January, Take Others Behind Paywall

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Last.fm, an early mover in the streaming music business, is scaling back some of its operations, and putting others behind a paywall, in a bid to cut costs and make more money out of its existing business, the company has announced.

Come January 15, the streaming radio company, bought by CBS for $280 million in 2007, is going to be putting its desktop radio service in the UK, U.S. and Germany behind a subscription paywall, as it is already in Canada, Australia, New Zealand, Ireland and Brazil. The subscription service currently costs £3 per month in the UK and also lets users stream on Last.fm’s mobile app. The mobile apps, meanwhile, today got a refresh: a new iOS app called “Scrobbler for iOS”, which brings to the iPhone Last.fm’s scrobbling functionality — matching up your listening behavior with your iTunes music collection to suggest music interesting to you.

The ad-supported, web-based streaming service, it notes, will continue to remain free. At the same time, it will be closing operations in all other countries where it currently offers a radio service. The changes were first spotted by TNW.

The moves are possibly signs of bigger issues at the company. Behind the scenes, we have heard that Last.fm has been in something of a management and organizational flux, as the once-bright upstart has been upstaged in the streaming music world by companies like Spotify. Now it seems like CBS is just trying to figure out what to do with it.

“CBS overpaid for Last.fm years ago and now no longer want to invest in it,” one source told us. “They need to stop moving it around and focus on making it big again.”

From an internal memo that I’ve seen, CBS effectively dissolved its separately-run Interactive Music Group (which included Metrolyrics, Last.fm and some ad sales people) back in August. David Goodman, who had been at the head of it, now has a different role within CBS.

In August, CBS Interactive reorganized its business into four units to improve “synergy” for better advertising and content sharing: CBS Brands (which contains CBS online properties like CBS.com); Consumer Web Brands (including CNET.com and now Last.fm and other music properties); B2B (including TechRepublic and ZDNet); and China. All report to Jim Lanzone, the president of CBSi, via general managers overseeing each division.

And in a sign of the integration and the “moving around” that our source referred to, next week, we have heard, Last.fm’s staff in London will be leaving their digs in Shoreditch, where they have been for the last 10 years, to move to CBSi’s offices in the slightly less hip area of Southwark.

Although CBS also has an extensive radio operation, it doesn’t seem that Last.fm has never really integrated with this division all that well.

Last.fm doesn’t talk usage numbers in its announcement today; rather it says the main reason for the changes has to do with licensing fees and restrictions for the service, and Last.fm looking to monetize better where it can. “We are always looking at ways to bring music to more people, when it can be done so economically,” the company writes in a statement on the site. “And we hope to be able to open streaming to a wider audience in the future.”

Indeed, if the biggest music streaming service of all, Spotify, is still losing money on its streaming service (although the loss is narrowing, it seems) because of licensing fees coupled with marketing and operational costs, then the signs are not great for others in the field.

It’s a far cry from the hip streaming service that first emerged back in 2002. Its founders have moved on to catch other fish.

It will be interesting to see what kind of an effect today’s changes have on Last.fm’s business: it’s not clear how many users it had around the world, even though it would have been paying licensing fees to service them.

At the same time, Last.fm notes that ad-supported, web browser-based listening is the most popular way to listen to the site in the U.S., UK and Germany. It’s likely that this move may just push more people in those markets to that web service rather than compel them to pay to use the desktop client.

To sweeten the deal for paid radio services using the desktop client, Last.fm is planning to release a new version of its desktop client. Currently in beta, it “remains the best way to scrobble” and use other features, says Last.fm.

Last.fm notes that in other countries — it also offers services in Spain, France, Italy, Japan, Poland, Portugal, Russia, Sweden, Turkey and China — radio streaming will no longer be an option as of January 15, “even to subscribers,” because of licensing restrictions. “Scrobbling remains free and your listening data, charts and recommendations will not be affected by this change,” it writes. Other services that will remain for paying subscribers include ad-free browsing on the site, access to demos, “and other features we’re working hard to add.”

However, although this isn’t a final nail in the coffin for Last.fm, it’s hard to see how many people will want to stay Last.fm customers for data alone. And sure enough, Last.fm is offering these international users the chance to cancel their subscriptions altogether. “We understand if you wish to cancel your subscription,” the site says. “If you have paid for a subscription longer than 30 days up-front, you can request a refund.”