The site has long offered a paid subscription option ($3 per month in the United States) that removes advertising and adds playback flexibility. Soon, that fee will be mandatory for listeners in unsupported countries who want to access the 7 million songs on the interactive music service.
The reason, according to a source close to the situation, is that ad rates are not high enough in other countries to cover the Last.fm's costs there.
Music fans in the rest of the world will be able to pay for the same ad-free version of the service that's available in Germany, Britain and the United States — it's just that they will no longer have the ad-free option, because the ads sold in their countries wouldn't generate enough revenue to keep pace with royalty payments, and Last.fm lacks localized advertising teams in those countries.
In ad-supported media, listeners are only worth what advertisers are willing to pay. In this case, music fans in three specific countries will be able to pay for music with their time spent watching ads, while those in other countries will have to pay for the premium, ad- free version.
A comment that Wired.com has verified was posted by Last.fm employee Matthew Ogle explains that these three countries support strong Last.fm ad sales departments. “These are the countries in which we have the most resources to support an ad sales organization, which is how we earn money to pay artists and labels for their music," he wrote. “We are focused on the U.S., U.K., and Germany as key markets, with the help of the CBS Interactive sales force and our own sales team here in London. Our headquarters are in the U.K. and we've always had a strong presence in DE."
“In the United States, United Kingdom and Germany, nothing will change," posted Last.fm co-founder Richard Jones on Last.fm's blog. “In all other countries, listening to Last.fm Radio will soon require a subscription of €3.00 per month" or the local equivalent. The Last.fm social website and all of its features will still be accessible for free in the rest of the world, but in the vast majority of the world's 200 or so countries, as Wired.com confirmed with a company spokeswoman, the €3.00 monthly fee will apply. Last.fm, acquired by CBS early last year, has deals with over 280,000 labels and artists, some of which it pays directly. (Warner Music Group, which failed to renew its contract with Last.fm last summer, is not one of them).
Jones did not explain why the company is implementing the fee all over the world except for in the three above-mentioned countries, other than that it was necessary in order for Last.fm to “keep providing the best radio service on the web."
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