The web-based radio service announced this morning that it would begin charging for its streams through smartphone apps and home-entertainment devices as early as next week.
Last.fm will remain a free offering on its website and through its desktop app. Microsoft
Pandora Music is loving this, naturally. Sirius XM Radio
It's just not easy to run a commercial music streaming service these days, especially if you rely entirely on advertising revenue.
Several dozen users have chimed in on this morning's Last.fm blog announcement, and they're not happy. Most are cursing the new fees charged by Euro darling Spotify and now Last.fm.
Don't be surprised. It's not easy to pay streaming costs and music licensing fees. On web-based streams, at least a service provider can offer up a steady flow of display and audio ads. The same can't be said for entertainment devices where audio ads are the only option. Earbud-donning smartphone owners also aren't staring at their screens.
Pandora has succeeded by scaling its service through millions of subscribers. It offers premium access to paying subscribers or heavy users who value the service the most, but its mainstream success hinges entirely on its ability to remain a streaming freebie for the masses.
Last.fm's move is great news for Sirius XM. The satellite radio provider hasn't had a problem pitching its service to car owners with factory-installed receivers, but it's been a harder sell on smartphones.
The "why should I pay for something that's freely available elsewhere" argument is getting more hollow as elsewhere continues to shrink.
Last.fm will come to regret this move. Its listener base will dwindle substantially. Even those streaming on their PCs or Xbox consoles may begin to start smoking out alternatives, fearing that their platforms will be the next ones to inherit the paywall.
Once you go bank, you never go back.
Can free ad-supported streams be profitable? Share your thoughts in the comment box below.
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Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.