No, really. It’s not an hypothesis: Last.Fm has just announced that it will charge users (outside of US, UK and Germany) 3€/month to listen to its radio.
It’s easy to relate this news to the article by the Economist that announced the end of the free model online*, but ultimately this may just prove how wrong that article was.
The first reaction we can have is that Last.Fm made a stupid mistake, for three reasons:
- It’s not something you do now that Spotify is getting mainstream and seems likely to make it big
- It’s not something you do in those countries where Last.Fm is less penetrated, and use of the internet is less evolved. If you had a choice, you would probably charge american and english consumers, because they best understand the value of Last.Fm, and if they’ve been using it for a while there may be an inherent cost in opting out and switching to another service (ie. getting familiar with the new service, reinstating your preferences…). Hopefully that cost would be psychologically higher than 3€/month.
- It’s not something you do, period. Digital music is free. Not because it’s a viable business model. Simply because it can be. And people would rather have it for free, than pay for it.
These considerations are so obvious that we must assume Last.Fm simply had no other choice. Let’s see what more will come out of this…
Final Burp: Back when Napster was shut down, I was wondering why Shawn Fanning didn’t just move the servers to another country where he wouldn’t face serious legal threats. Still wondering…
* If you read the article, here’s my comment:
“There’s a fundamental mistake in the article.
Freeconomics did not happen as a business strategy aimed at making money. It happened because: a) technology enables users to “get stuff” for free; b) a certain number of people globally are willing to create and distribute such technology for free.
Whether this is a sustainable business model or not is irrilevant, because Napster, BitTorrent, Linux, Wikipedia, Facebook and many others were not born to be businesses. If their attempts to make money gets in the way of user experience, somebody in the world will come up with a free alternative, and that’s where users will flow to.
The trick is, one person in the world is enough to create a free alternative available to a global audience.”