Warner Music (WMG) Pulls Out Of Last.fm (CBS) - wow!
I just read this news on Silicon Alley Insider, and the NYT Bits blog (belatedly): Warner Music Group has pulled their music off the on-demand part of Last.fm due to... you guessed it, conflicts over how much money they are going to get for graciously allowing Last.fm to 'use' their music with permission while there are 100s if not 1000s of other streaming on-demand whatever they feel like, without any considerations to WMG or any other label whatsoever.
Peter Kafka (who covers this space with great skill, btw) writes: "Warner Music Group (WMG) has pulled its catalog out of Last.fm's "on demand" free streaming service, which the CBS-owned service launched to great fanfare
in January. Users can still hear Warner artists via the site's "radio"
option, which doesn't allow you to select individual songs. But you
can't order up individual songs from WMG artists...." see below.
The NYT blog adds: "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.)"
My take: clearly, once again, this is yet another occasion of a major record label exploiting market weaknesses, the lack of licensing standards and their perceived gatekeeper position to extract ever more money from a completely nascent ecosystem that only exists because some other large company is investing it it, in the first place! Keep in mind that Last.fm's users aren't paying for the music, their CPMs are probably in the neighborhood of 15-30 cents and their ad inventories probably mostly unsold... but never mind, someone needs to pay to play. Right?
Instead of looking for multilateral, market-oriented solutions WMG's only concern is that Last.fm 'pay up or go away'. In my view, this kind of market behavior ranks right next to cold-war power-play, and goes back to a seriously outdated "I win you lose" paradigm of doing business - and this will come back to bite them, no doubt (check out the stock price comparison chart below for an inkling of where this will go).
So what about iMeem and Myspace - well, the major labels have equity in both of them - that's what this is all about - this is exactly why I decided to shut down my own music widget service, Sonific (read more here).
Bottom line: the music industry is a perfectly dysfunctional ecosystem - there is just no other way to put it.
Some related stuff to check out
- My "End of Control" book blog
- My Music2.0 book
- My Presentations on the Future of Music & Media (50+ PDF downloads)
- My Facebook Group on Music2.0
- Video: What in the world IS Music2.0?
- Gerd Leonhard interviewed at Technation / ITConversations - The Next Stage of Online Music