Last.fm charging for mobile: outrage or inevitable?

On Monday, Last.fm’s Matthew Hawn announced that beginning February 15 the service would require that those listening via mobile apps and home entertainment devices such as Sonos and Squeezebox pay a subscription fee of $3 per month. Last.fm Radio will remain free for U.S., UK, and German listeners using a Web browser. U.S. and UK users can also continue to listen for free with Microsoft’s Xbox Live and Windows Mobile 7 phones.

It’s hard to say if this is a portent of things to come or simply a business decision made by a company that would love to see more entries on the plus side of the balance sheet.

In the things-to-come column, it’s part of a trend. All the music subscription services—Rhapsody, Napster, MOG, and Rdio—have introduced plans that allow them to stream (and download) their content to mobile devices. In order to enjoy this mobile compatibility, you pay extra. Last.fm could very well see the leap to mobile (which also eschews ads) as the appropriate time to charge a premium for some of its services, particularly as streaming is a large chunk of mobile media’s future.

On the “we need to make money” edge of the argument, this may be a necessary move. People quickly get used to free and it’s possible that Last.fm simply isn’t generating as much revenue as it would like with its current ad-based-with-subscriptions-thrown-in-for-good-measure model. We’re seeing more of this kind of thing in the publishing world, where news and media sites have discovered that giving away their content for free isn’t a sustainable way to run a business. Find a hook that can generate revenue—media delivered to mobile, for example, as we’ve seen with News Corp.’s The Daily—and your company is hopefully on more solid financial footing.

The difficulty in making this move is that Last.fm could be squeezed from below and above. Pandora offers a service similar to Last.fm and continues to provide that service for free not only within a Web browser but also with its mobile apps and on home entertainment systems. If you seek another way to be fed music you like based on favorite artists and genres, a move to Pandora seems the way to go for those unwilling to cough up Last.fm’s perfectly affordable three-bucks-a-month subscription fee. (Of course, there’s nothing preventing Pandora from also adopting this model, particularly when its closest competitor has made the move.)

And from the top, if you can pump up your music allowance by $7 more a month, you can call up exactly the music you want—ad-free—from Rhapsody, Napster, MOG, and Rdio. Do that and you’ll get no more, “How did this song get into the mix!?” moments that you might experience with Last.fm or Pandora. With these services (as well as Spotify, which isn’t available in the U.S.) you can listen to and download the specific music you desire to your iOS device.

And, of course, there’s the possibility that some listeners will take Another Path—Internet radio, music streamed from their computers, the music they already own, or the less-savory-standby: piracy.

A monthly subscription price that amounts to less than a pack of smokes is unlikely to break anyone’s bank, but in a world where many consider music valueless, outrage alone may spike Last.fm’s plans in the short term. In the long term however, it’s likely a bow to the inevitable.

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