lostfm

Lost.fm

There is quite a controversy building around whether CBS-owned Last.fm

is an eventual replacement for terrestrial radio.

The Motley Fool investors publication says Last.fm could mean the end

of radio.

Kurt Hanson, who I respect more on these issues, says wait one minute

-- Last.fm isn't even radio.

It's an interesting prospect either way. To bring you up to date the

four major record labels have cut a deal with Last.fm to get a penny

or so for every time a young consumer goes to Last.fm and requests a

song. Hanson points out, "Going to a website and saying "I would like

to hear `You Know I'm No Good' by Amy Winehouse right now and then

being played that song is not "radio" by any stretch of the definition

that I've ever heard."

The Motley Fool is enamored at the prospect of free online streaming

of music from the major labels and a host of indies.

One problem.

Young people have voted again and again in this race that they want to

own their music not rent it or listen through a glorified subscription

or ad-supported service.

The labels -- a group that would cause me to do the opposite of what

they do -- is simultaneously selling music to cellphone companies so

their customers can have a phone full of music included with the price

of the phone. That's a loser with young people.

Last.fm -- now with the ability to play what you say instead of what

terrestrial stations like "Jack" want to play -- is also a

non-starter.

These ideas and concepts are the creative result of older and in some

cases out of touch people who do not understand the young consumer.

These products are what they think young people should listen to

vis-a-vis their dying record businesses. They are not, however, what

young people want. In the months ahead, the painful truth will become

evident even to them.

Here's what the entrance and exits polls -- so to speak -- are telling

us about the next generation, the record business and new forms of

listening:

1. They want to own their music (I use the term own loosely to include

paid and stolen music). Rental services like Napster and Rhapsody have

not resonated. The labels want young consumers to rent. Cell phone

companies can't see why adding a few extra bucks to the monthly bill

for all the music in the world won't be a winner. I'll give you two

reasons: one is the iPod -- the choice of the next generation and it

isn't going away any time soon. And, two, the next generation can

steal music without a problem. Who needs rental?

2. Young listeners don't like radio because they have alternatives,

but radio has sucked since the 80's -- at least that's when the term

"radio sucks" emerged. No one says, "iPods suck" -- at least not yet.

But young people show signs of iPod fatigue. Properly read, this means

they are not giving up their iPods, they'd just like to be entertained

every once in a while.

3. Internet radio will be the smash hit we all think it can be once it

can be received everywhere on every device. It's beginning to happen

now, but most people don't listen to Internet radio on the go. And by

Internet radio I don't mean terrestrial radio "lite" or another

version of an HD subchannel. I mean real entertainment. Internet radio

is the killer app.

4. Keep an eye out for some form of mash-up music sharing. We're

seeing this in video where users can take pictures and send them along

to a friend to add music or whatever. Control freaks like record and

radio execs will do just about anything but enable a generation to

fool with their artists rights. Admirable? Not when their customers do

it anyway.

5. Young consumers have iPods -- they have hard drives loaded with

music bought and stolen. They also want to be entertained. Instead the

labels and their cohorts keep trying to invent the next thing but this

generation is going to tell you what the next thing is. And what is

it? Entertainment. They want to be entertained. They want to

participate in the entertainment. If I'm in radio reading this I am

jumping for joy -- that's a core radio skill -- but it will have to be

transfered to where the next generation lives and it's not on the

radio band.

6. Radio (whether Last.fm or terrestrial) cannot compete with an iPod

for playing favorite music. An iPod is a storage device that plays

back music. Radio entertains -- or should. Subscription services or ad

driven services like Last.fm will be more popular with record labels

than with young consumers.

The Motley Fool says:

"Last.fm, bought by CBS... is providing on-demand delivery of its

growing digital library for free...Naturally, this is also bad news

for other companies selling digital tracks, like Apple, or music

subscription services like Napster and RealNetworks".

I disagree.

Terrestrial radio doesn't have to worry about what Last.fm is doing.

It needs to worry about what radio isn't doing.

If radio broadcasters want a prominent piece of the future, they are

going to have to provide entertainment content for the next generation

where they live -- on the Internet and through portable, mobile

devices -- not over the airwaves.

The one thing terrestrial radio has going for it is that it is free.

Free works just fine with this generation, but if there is a lesson

the labels, Last.fm and everyone else will soon learn it is that iPods

are storage devices and that young people prefer to own their music.

That radio is about entertainment and in the future radio will be

Internet-based, readily delivered on mobile devices and has some

component of social networking or interactivity built in.

Last.fm is Lost.fm if they try to make it the newest version of a

"free music" service that masquerades as an iPod.

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