Last.fm is killing off its "subscription radio" service from 28 April as the CBS-owned company struggles in the face of growing competition.
Streaming services to any device from Last.fm's servers will stop, including to mobile phones. It will play songs through a desktop or iPhone app which is still being tested which plays YouTube videos and links to Spotify to allow on-demand. The move will cut a significant part of its revenues, which were split roughly two-to-one between adverts and subscriptions. The company will still offer a subscription tier to remove ads from the ad-supported player and early access to new features.
The decision has been poorly received by users on its forum, who said that it would alienate those who had shown their support for the company by paying money. The company says it will refund unused parts of annual subscriptions.
Announcing the move on Wednesday, the company said that "the music landscape has changed considerably during that time and we've been forced to make some very difficult decisions surrounding our core products and services."
Focus on scrobbling
Instead, it said, it would focus on "what we think Last.fm does best: scrobbling [which builds a profile of the music a person listens to], music discovery and recommendations."
Last.fm streaming subscriptions were comparatively cheap, costing £3 per month for unlimited streaming of any of its catalogue to any compatible device, including mobile phone, tablets and others. A Spotify subscription with the same utility would cost from £5 to £10 per month.
But streaming costs money: every time a track is streamed, the copyright holder has to be paid a small amount. If the money brought in from subscriptions doesn't cover that cost and server and other costs, the business rapidly turns unprofitable. Streaming music companies have complained that the fixed price of per-track streaming makes it difficult to create a profitable company because that key expense does not fall as usage rises.
Broader retrenchment
The move is part of a broader retrenchment at the company. In January it said it would begin a partnership with Spotify to bring back on-demand music via play buttons for Spotify's catalogue of 20m songs, and also began using YouTube as the source of its music videos. That shifts the obligation to pay copyright holders for song plays onto the other two companies - but leaves Last.fm reliant on them.
It will cut off its streaming service to mobile phones, computers and other platforms such as the Sonos music system at the end of April, the company said. It had already cut off its free radio streaming service in most countries in 2012.
In the Last.fm forums, users expressed disappointment at the move. "For my part, thanks but no thanks, last.fm. I tried the new player and only lasted about two songs; as I said in my other thread, I'm not interested in paying for the privilege of being forced to watch YouTube ads," said "Churumbela".
In December, the company's UK filing for 2012 revealed that it made a pre-tax loss of £4m in that year and that revenues had fallen by 21% year-on-year to £6.38m. Of that, subscription revenue had fallen by 12% to £1.55m, while advertising revenue dropped by 23% to £4.33m.
Last.fm was one of the UK's earliest successes to emerge from the dot-com crash, starting in 2002. It was bought by CBS in May 2007 for $280m, but the TV broadcaster didn't bring immediate success to the music company, even though by January 2008 it was claiming to have the "world's biggest jukebox".
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