CBS Adds to Streaming and Social Media Holdings with Last.fm Buy
Acquisition of music discovery service brings both audience and technology.
The community-based music discovery site Last.fm is now a property of CBS Corporation, which paid $280 million for the five-year-old, U.K.-based platform
CBS, in announcing the deal, said Last.fm has more than 15 million users in more than 200 countries and is “one of the most well established, fastest growing online community networks out there.” The media giant said the acquisition is in line with other CBS Interactive investments in Web sites that are popular with the younger set, including Wallstrip.com, Joost and Spot Runner.
CBS President and CEO Leslie Moonves, in a statement, praised Last.fm’s management team for being people who understand “how to build an engaged and passionate community where users learn, discover and share music globally.” He also said the acquisition fits well with his company’s goal to attract younger viewers and listeners as it attempts to “transition from a content company into an audience company.”
To Forrester Research analyst James McQuivey, the deal is less about gaining more eyes and ears for CBS advertisers and more about snapping up Last.fm’s technology. One of the site’s unique attributes is its ability to monitor the music tastes of its users. It creates social networks around musical tastes and provides customized Internet radio streams.
“From my vantage point, I see an audience acquisition play since Last.fm is growing handily,” said McQuivey. “But I also see a technology play, where CBS could hope to use this technology in more of its sites.”
CBS Interactive President Quincy Smith, in the announcement, said Last.fm provides CBS with “the opportunity for monetization that does not distract the user.”
But executives have downplayed the notion that in-stream audio advertising will be injected into the service anytime soon. When Last.fm co-founder Richard Jones posted about the deal to the company’s blog, some site users expressed concern about such ad clutter in the comments. Jones replied, “Regarding the ads in the stream – we have no plans to do this (for obvious reasons). Our label deals will allow us to do more commercial stuff though, such as on-demand playback etc.”
McQuivey questioned whether those vague monetization plans are substantial enough to warrant CBS’ expenditure of more than a quarter million dollars. “As for unique ad opportunities, the only obvious play is that CBS now has new ad inventory to sell as part of its multichannel ad sales strategy – TV, radio, and Internet,” said the analyst. “Though you wouldn’t spend hundreds of millions just to buy that additional ad inventory alone – so they have to believe the technology has benefits that will extend beyond just this site.”
CBS said the Last.fm team, including founders Felix Miller, Martin Stiksel and Jones, will continue to independently run the network and will “work with all relevant CBS divisions to apply their community-building and technology expertise to extend CBS businesses online and within the mobile space.”
In a statement, Miller said coming under the CBS umbrella will allow Last.fm to expand its innovations. He said CBS officials “understood our strategy from the first meeting” and were able to comprehend how the Last.fm platform “could ultimately apply to all forms of media.”
Moonves said CBS believes it can create social networks around all of its properties and it believes the Last.fm technology can help it do that.
