The Warner Music Ends at Last.FM

Let’s just say, God help you, that some mix of spring fever and midlife crisis made you decide that you simply could not make it through your afternoon without listening to Led Zeppelin’s “Stairway to Heaven.” So you click over to Last.FM, because, as an attentive Bits reader, you remember that site, now owned by CBS, is offering to let you listen to any track you want anytime you want to.
Add one more disappointment to your middle-aged life: Earlier this week, Warner Music Group pulled Led Zeppelin songs and hundreds of thousands of other tracks off Last.FM’s service.
Big surprise: The issue is money, according to two executives briefed on the negotiations. When Warner’s contract with Last.FM came up, the label wanted more money than CBS is willing to pay. Warner’s view is the existing deal had “come up short,” said one of the executives. Other similar services, such as Imeem and the forthcoming MySpace Music, offer richer deals, in Warner’s view. (The dispute doesn’t relate to the “Internet radio” aspect of Last.FM, in which users can’t select which exact songs they want to hear.)
Warner is disappointed, the executives said, because Last.FM hasn’t introduced a fee-based subscription service that it had planned to offer. Moreover, the fees related to the existing free service have been far less than it had hoped. Last.FM pays the labels a fee for every track it plays and a percentage of the revenue it earns from advertising displayed while the songs are playing. Warner argues that usage, and thus per-play fees, has been lower than expected. Moreover, it wants a cut of the advertising revenue on any page related to its music—such as discussion about a song—not just on the music player itself.
A Warner spokesman confirmed that the label’s deal with Last.FM has ended. A CBS spokeswoman sent this statement:
We are currently negotiating a new agreement with Warner Music Group and are working hard to build the most comprehensive music service on the Web. While we work things out, be assured that there’s more than enough music to fill a lifetime of listening on Last.fm, and we are continually adding to it.
CBS renewed its contracts with the other three labels until next year, so this issue for now relates just to Warner, one executive said.
Warner’s pullout was first reported by Silicon Alley Insider.
There is a bit more at stake here than a spat between two media companies over deal terms. I’ve written that the path out of the current dysfunctional state of the music business may well be advertising-supported free music streaming. It’s not clear yet whether any of these services can attract enough users to take a dent out of music piracy. And even if they did, there still seems to be a wide gap between how much money can be earned from advertising and how much the music companies feel they need.
My deep apologies as I drift off on this Friday afternoon humming this to myself:
There’s a label who’s sure all that glitters is gold…

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