Online music service/community, Last.fm attracted a lot of attention recently when CBS purchased the company for a staggering $280 million USD. People started to ask questions and Last.fm went under the magnifying glass. What some people found and what has changed since the buy isn’t as nice to hear as the site’s musical selections. Has Last.fm been using a payola system for music included in its database? Is CBS going to turn it into something that current users would be offended by?

Retaining Royalties From Indie Artists

There was quite a stir online about Clear Channel’s recent practice of waiving royalties to independent musicians and labels who wanted to receive airtime on Clear Channel radio stations. The reason that Clear Channel was offering airtime to independent music in the first place was due to a FCC penalty instated in response to Cheap Channel’s pay-per-play payola scheme. So, to turn around and retain royalties even from future sales of the music was offensive to just about everyone. Well, it turns out that this kind of license agreement is not unusual under normal business practices and lately it’s been causing a bit of controversy where Last.fm is concerned. Apparently Last.fm also insists that royalties be waived by independent and DIY musicians submitting music to be aired on the streaming service. But in a case like this, it mostly depends on whether the musicians who submit music mind the exception of royalties. Or, if the people who use the service object to their experience with the music is influenced by economics. What do you think? As Last.fm users, do you feel the diversity of music is balanced? Would you waive your rights to royalties to have your music included and available?

Last.fm Lucratively Enjoys A Subsidized Royalty Rate

Meanwhile, SoundExchange is in a tizzle over Last.fm’s antiquated royalty payment status. Last.fm is only required to pay 12% of its entire revenue to royalty fees while many webcasters are facing royalty fees of 100-1000% of their revenue. Last.fm’s discount is due to a subsidy plan devised to help web start-ups that was requested by Congress in 2003. Is this why Congress is resisting helping small webcasters again? Have they been under pressure from the CRB and SoundExchange because they feel that the subsidy for Last.fm - and many other streaming stations that year - backfired? The CRB and SoundExchange are particularly upset that CBS just paid a premium $280 mil without owing any extra royalties.

CBS’ Influence Over Last.fm

CBS’ acquisition of Last.fm has more benfits for the mega-corporation than meets the eye. CNET probes some of the possibilities of what we might see unfold. Many people around the music industry noticed that Last.fm had nothing to do with the internet radio Day Of Silence campaign. They not only broadcast all day, they seem to be ignoring users questions about their desire to save net radio from being squashed by royalty rate increases. As noted earlier, Last.fm enjoys a reduced royalty rate and CBS has deep pockets. Finally, according to the NYTimes, CBS also intends to introduce it’s own programming to Last.fm. So, users of the service can look forward to an increase in content. Whether it will be good content or not, remains to be seen.

What do you think of all this? Are you a Last.fm user? Do you fell this is just business as usual, or poor practice, or both? Add to the discussion below…

Last.fm LINKS

Last.fm
CBS/Last.fm poor corporate citizens with deep pockets : From TechCrunch
What CBS got for $280 mil USD when it bought Last.fm : From CNET
SoundExchange’s tizzle at Last.fm’s royalty rates
hypebot reports on Last.fm waiving royalties to indie music
NYTimes - CBS Buys Last.fm Online Radio Site - you might have to log in to see this article, but if you are a NYT reader that won’t matter, and if you’re not you should sign up. Excellent paper.

Pages about CRB ~ independent ~ internet radio ~ LastFM ~ royalties