Table of Contents

Critical assessment of a corporate website: www.Last.fm ....................................2
1. Overview .................................................................................................................................2 2. Service Offering ......................................................................................................................2 3. Audience Profile .....................................................................................................................2 4. Objective & Business Model ..................................................................................................3
4.1 Subscription Fees ......................................................................................................................................3 4.2 Advertising ................................................................................................................................................3 4.3 Affiliate Relationships ..............................................................................................................................4

5. Web Evaluation .......................................................................................................................5
5.1 Content .......................................................................................................................................................5 5.2 Usability & Accessibility .........................................................................................................................5 5.3 Search Engine Optimisation ...................................................................................................................5 5.4 Technology ................................................................................................................................................6

6. Competitor Analysis ..............................................................................................................6
6.1 Porters 5 Forces .........................................................................................................................................7 6.2 Channel Strategy ......................................................................................................................................7

7. Conclusion ...............................................................................................................................8

Appendix ....................................................................................................................10 Bibliography ...............................................................................................................20
1. Webpages ...............................................................................................................................20

M A R K R E G A N

1 / 20

CRITICAL ASSESSMENT OF A CORPORATE WEBSITE: WWW.LAST.FM
1. Overview Last.fm is a UK-based internet radio station and social network that was acquired by CBS Broadcasting Inc. for $280 million USD on the 30th May 2007. Last.fm is available in 12 different languages and is actively used by over 30 million users in over 200 countries1 . This report aims to critically analyse and give recommendations on Last.fm’s website, business model and strategy. 2. Service Offering Last.fm’s key service offering is an online radio station that is personalised to the music taste of each individual user. A user can begin listening to Last.fm by simply entering the name of an song or artist. Last.fm then servers the users with a series of songs that are similar to - but not the same as - the user’s request. Hence, Last.fm is not an “on-demand” music streaming service, but rather a music discovery service. As an avid user of the service, I can confirm that the service adds considerable value to my music listening experience. This view is reinforced by the fact that 75% of it’s users return to the site within 24 hours 2 and that unique user visits has increased by 90% year over year 3. This service is possible because Last.fm aggressively collects data from all activity on it’s site. As users browse and listen to music on the Last.fm site, their listening history is recorded. Users are also given the option to “love” or “ban” a song (See Fig 1) depending on whether or not they like it. Users can also download a small program called Audioscrobber (See Fig 2) that monitors the users iTunes library. As users listen to music (on their iPod or computer), this information is sent to Last.fm and stored on their servers. Additionally, Last.fm collects information regarding the users gender, age & location. 3. Audience Profile
4 Empirical evidence from last.fm shows

COMMENTS

UK User age breakdown U18 18-24 25-30 31-35 36-40 41-45 46-55 56+ 15% 49% 18% 7% 5% 3% 2% 1%

that the vast majority of the their users are under 30 years of age. And with a 62% majority 5, Last.fm tends to attract more males than females. Statistics produced by Last.fm show that 84% of it’s users like to introduce their friends to new music and 99% of their users listen to music stored on their MP3 players or digital libraries. Additionally, 23% of their users own or

plan on owning an iPhone. Given the above needs, I believe Last.fm is effectively targeting it’s user base by providing them with the functionality to quickly share and recommend music to a friend via their social network of choice (See Fig 16). Additionally, Last.fm

1

Wikipedia 2009, Last.fm Radio Announcement, 4 May 2009,

http://blog.last.fm/2009/03/24/lastfm-radio-announcement.
2

Neilsen Online 2009, Last.fm audience stats: Nielsen Online @plan customer profile Study, Jan

2009.
3

Compete 2009, Site Profile for Last.fm, 3 May 2009,

http://siteanalytics.compete.com/Last.fm/?metric=uv+sess&months=12.
4 5

Last.fm 2009, Media Kit, 4 May 2009, http://www.last.fm/resources. Last.fm 2009, Media Kit, 4 May 2009, http://www.last.fm/resources.
2 / 20

M A R K R E G A N

provides it’s users with multiple integration points to the service; allowing users to listen to music on their MP3 player or computer. And Last.fm recently developed an iPhone application in response to the the growing mobile needs of it’s user base (See Fig 3). Additionally, Last.fm actively engages with it’s customers and collects their requests and feedback 6. They are committed to serving their users with an excellent service, and their commitment to user centred design is a reflection of this. 4. Objective & Business Model It is the objective of Last.fm to syndicate audio content, build a community around music and to generate revenue via 3 core business models; Subscription Fees, Advertising and Affiliate Relationships. 4.1 Subscription Fees Users that wish to avail of additional premium features can pay a monthly fee of £3, $3 or €3 depending on their country of residence7. As shown below, the difference between the free and premium service is minute. Features User Profile Last.fm Radio Recommendations Groups Events Global Charts API usage Monthly Prescription Play Custom Playlists User Profile Analytics Server Priority “Black” labeled Avatar Free ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✗ ✗ ✗ ✗ Premium ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

COMMENTS

This lack of differentiation is a fundamental flaw in their subscription fee business model. In order for a consumer to part with their money, the value proposition needs to clearly distinguish between the free and premium services. In order to create a greater value proposition, I would recommend that they increase the feature offering of their premium account. 4.2 Advertising Last.fm displays non-contextual banner advertising throughout their site. In recent months, Last.fm have struggled to generate significant revenue from their advertising activities 8. In response to this, they have begun forcing users outside of the UK, USA and Germany to pay

6 7 8

Last.fm 2009, Website Support, 4 May 2009, http://www.last.fm/forum/21713. Last.fm 2009, Subscribe to Last.fm, 4 May 2009, http://www.last.fm/subscribe. Last.fm 2009, Radio Announcement Revisited, 29 April 2009,
3 / 20

http://blog.Last.fm/2009/03/30/radio-announcement-revisited.
M A R K R E G A N

a subscription fee to support the cost of running the service9 . I believe this negative reaction to low advertising revenue will significantly hurt Last.fm in the long run. This problem is rooted in the fact that their user base is spread out over 200 countries. This poses several difficulties as they try and sell advertising space in each country to support the service. Advertisers are interested in targeting a specific user demographic but unfortunately, Last.fm only offers advertisers a limited amount of granular targeting. Advertisers can specify gender, age range and region for their advertising campaigns. Given the degree in which Last.fm profiles it’s users, I recommend that they offer advertiser a greater degree of targeting. Specifically, I recommend that Last.fm engages in behavioural based advertising. Studies have shown that users can be segmented by their personal taste in music 10. PhD student Virgil Griffith has shown that a correlation exists between a student’s SAT scores and the types of music you listen to. Listeners of Beethoven received the highest SAT scores on average whereas listeners of Soca scored the lowest. Additionally, a user can be segmented by their listening patterns; a user that listens to music erratically during the week and late at night has a fundamentally different profile than a person who listens to music at regular and predictable time periods. The geographical location of the user could also offer a unique insight into their life. For example, I have lived in Dublin for 5 years and recently moved to London. It would be possible for Last.fm to identify this permanent change of address (IP address) and serve me with advertisements related to mobile phone contracts or banking services; an advertisement in which I would be very interested. Embracing this level of behavioural advertising will improve the relevancy of the advertisements being served to the user; resulting in higher click through rates, higher CPM (cost per 1000 impressions) and hence higher advertising revenue. 4.3 Affiliate Relationships As a user listens to Last.fm, they are presented with music that closely matches their personal profile. Despite the fact that I have an obscure taste in music, I find their suggestions to be excellent and highly relevant. While listening to Last.fm, users are presented with an option to purchase the song from 3rd party vendors such as iTunes, Amazon or 7Digital. In the case of transactions that are completed through iTunes, Last.fm receives a “5 percent commission on all qualifying sales”11. The “Buy” button is prominently placed in the Last.fm player (See Fig 1) and the process of purchasing a song - from click to download - takes less than 30 seconds. I believe this is an excellent revenue model that is well implemented. One suggestion would be to bundle a users favourite songs together (songs that are not present in their iTunes library) and allow the user to purchase them in one simple process. In an attempt to generate additional revenue through affiliate relationships, Last.fm could integrate their existing event recommendation service with a 3rd party ticket vendors such as TicketMaster.com.

COMMENTS

9

Last.fm 2009, Radio Announcement Revisited, 4 May 2009,

http://blog.last.fm/2009/03/30/radio-announcement-revisited.
10

Virgil Griffith 2009, Music that makes you dumb, 4 May 2009,

http://musicthatmakesyoudumb.virgil.gr.
11

Apple Inc., Frequently Asked Questions, 28 April 2009,
4 / 20

http://www.apple.com/itunes/affiliates/faq.html.
M A R K R E G A N

5. Web Evaluation 5.1 Content Given that Last.fm is a personalised radio station, the content on the website is dynamic and highly relevant. Last.fm recognises that it’s site is used in different ways by many of it’s users. This is reflected in it’s home page, where it presents users with multiple focus points. As one would expect, a user can easily enter in the name of an artist or song to begin the Last.fm radio station (See Fig 4). Additionally, users are shown recommended music (See Fig 5), recommended events (See Fig 6), recommended videos (See Fig 7) and their friends recent activity (See Fig 8). The home page acts as a dashboard of the most important and relevant information (See Fig 9). Last.fm presents more generic information when the user is not logged in. They are presented with the most popular music (See Fig 10) and videos (See Fig 11) on Last.fm. The user is also presented with a location aware list of events for his/her area. In an attempt to comply with AIDA marketing guidelines (Attention, Interest, Desire, Action), the users attention is captured by a prominent banner (See Fig 12) that appears above the fold on the home page. Their interest is captured by the statement “What music do you like?” and a desire to use the service is created when the user reads “Based on what you listen to, Last.fm recommends you new music”. Finally, a cause to action is created by prompting the user to enter the name of an artist of song into the provided text field. 5.2 Usability & Accessibility In general, the Last.fm site is very easy to use. It’s navigation is simple and intuitively designed. It scored an impressive 29/31 in Waller’s seven point checklist; failing to providing accessibility options for the visually impaired and 640px browsers. The Last.fm web site is dependant on Flash Player 9 in order for users to listen to music. This does not pose an accessibility issue when you consider that statistics recently produced by Adobe claimed that 98.9% of computers in mature markets have the Flash Player installed12 . Statistics of computers in emerging markets were not provided. However, the internet connection speed would likely be the first barrier to entry in these countries. For users that do not have the Flash Player installed, they have the option of downloading the Audioscrobber application (See Fig 2). I tested Last.fm on all of major browsers and the found greatest no problems. Internet for web Explorer (IE) has historically provided challenges developers. It is clear from the web site source code to the right, that they are catering for IE’s lack of compliance to web standards. 5.3 Search Engine Optimisation Last.fm has included relevant and unique meta data on all of it’s pages. It’s has attached alt tags on most of the images on the site and has made appropriate use of the H1 tag; an attribute that Google pays particular attention to. More importantly, Last.fm shows a clear linking strategy within the site. Examining an artists page on Last.fm shows a number of links to similar artists. Although simple, this rational linking structure helps Google to

COMMENTS

<!--[if LT IE 7]> [...some code here...] <![endif]-->

12

Adobe 2009, Adobe Flash Player Version Penetration, 3 May 2009,
5 / 20

http://www.adobe.com/products/player_census/flashplayer/version_penetration.html.
M A R K R E G A N

understand the relationships between webpages; a theory referred to as the “semantic web” 13. This rational and systemic linking structure provides Google with valuable information I performed a simple search test on 20 artists and song names. I found that Last.fm was in the top 5 Google results for 95% of the searches, and in the top 3 results for 80% of the searches. This impressive statistics reflect Last.fm’s commitment to Search Engine Optimisation and it is not surprising that it received a score of 95/100 on Website Grader 14. 5.4 Technology Last.fm makes appropriate use of AJAX technologies (Asynchronous JavaScript + XML) to create a more interactive and fluid user experience. Put simply, AJAX works by passing small amounts of information in the background using javascript, as opposed to visibly refreshing the page. As a result, users often do not notice AJAX because of it’s passive characteristics. Last.fm implements AJAX functionality while a user is listening to music. As the flash player changes to a new song, the web page content around the player dynamically changes; a small feature that results in significant usability improvements when implemented across an entire site. Last.fm is created using XHTML and has provided developers with access to it’s API (Application Programming Interface) via XML. This has resulted in a number of Last.fm “mashups” such as LastGraph that produces a beautiful visualisation of your personal music history (See Fig 13). A more practical “mashup” example can bee seen with the integration of Facebook and Last.fm (See Fig 14). When a user “loves” a song on Last.fm it automatically appears in the users Facebook page; enabling the viral spread of a users recommendations. 6. Competitor Analysis Last.fm is competing in an increasingly competitive online market (See table below). Services such as Pandora, GrooveShark & Imeem have garnered significant market share. Pandora offers a similar music discovery & streaming service (See Fig 15), however the underlying technology used is completely different to that of Last.fm. Last.fm analyses the listening history of it’s users and arranges its users into affinity clusters. In contrast, Pandora analyses the audio content of each individual song and arranges the songs into affinity clusters. From experience, Pandora’s recommendation engine is closely tied to song’s genre, whereas Last.fm’s systemic trend based approach has resulted in more relevant recommendations. Hence, Last.fm’s aggressive data mining practices are at the heart of their competitive strategy. Last.fm Competitors Pandora Qloud Jango GroveShark MyStrands Imeem Musicovery Slacker Critical Metrics Lala Mufin MixCloud iLike Spiral Frog

COMMENTS

13 14

Wikipedia 2009, Semantic Web, 4 May 2009, http://en.wikipedia.org/wiki/Semantic_Web. Website Grader 2009, Website Marketing SEO Tool Score, 4 May 2009,
6 / 20

http://website.grader.com.
M A R K R E G A N

High: Proliferation of free and illegal services on the internet creates new substitution threats.

COMMENTS

Porter’s 5 Forces
Ref: Strategy and the Internet, Michael Porter, Harvard Business Review, 2001.

Threat of Substitutes

Bargaining Power of Suppliers
High: Music labels have increased royalties from online radio stations every year and maintain control over Last.fm.

Rivalry amongst existing competitors
High: Last.fm are competing in over 200 countries in a market that is highly competitive.

Buyers Bargaining Power
Medium: Last.fm’s proprietary recommendation technology increases switching costs and hence lowers consumer bargaining power. High: Infrastructure cost,

Barriers to Entry

contracts and proprietary technology all contribute to a high barrier of entry.

6.1 Porters 5 Forces As Last.fm collects more of it’s users listening history, their recommendations become more relevant to the user. This results in a more valuable user experience, an increase in switching costs and hence a lower threat of substitutes. The bargaining power of buyers is clearly very high, as consumers can choose from an array of illegal downloading services or free streaming internet sites. In such a market, establishing and sustaining a distinct competitive advantage is critical. Last.fm’s data mining & personalisation strategy also results in a high barrier to entry for competitors. New entrants to the market that wish to compete on music recommendation features will need to gain a critical mass of users/data before any relevant recommendations can be made. Last.fm’s catalogue of over 6 million songs and long term contracts with all of the large music labels further increases this barrier of entry. Music labels have maintained control over the online radio services by consistently increasing royalty fees15. Given that online radio stations account for a miniscule amount of their labels overall revenue, the bargaining power of suppliers is high. 6.2 Channel Strategy Last.fm’s service model impacts on a wide range of traditional channels. It could be argued that Last.fm negatively impacts music sales (CD’s or MP3’s) as consumers can listen to Last.fm as a substitute to traditional media. Conversely, it could be argued that Last.fm draws consumers away from illegal downloading channels and hence generates a small amount of revenue for the music industry; revenue that would otherwise be lost.

15

Last.fm 2009, Pandora KO-ed by new royalties?, 3 May 2009,
7 / 20

http://gigaom.com/2007/03/05/webcaster-royalty-rates-go-up/.
M A R K R E G A N

It is very difficult to gauge the effect that Last.fm and similar services are having on the music industry. One thing is certain, Last.fm is adding a considerable amount of value to the listening experience of over 30 million users. Last.fm have presented the music industry with an alternative business model; syndicate content and generate revenue via advertising and subscription fees. The music industry is going through a period of rapid change. Annual revenues have fallen for the seventh time in eight years16 and music labels are finding it more and more difficult to monazite their content. Despite Last.fm’s low margins, the music industry welcomes innovative service models such as Last.fm. However, they recognise that the internet is becoming more and more ubiquitous and that in years to come, streaming services like Last.fm may replace the need for MP3’s & CD’s completely; a significant high margin revenue stream for the music industry. In an attempt to strengthen the revenue generation from internet radio stations, the music labels have tried to get royalties increased dramatically. Tim Westergren, co-founder of Pandora believes that if royalties are increased “it’s over for us and every other internet radio service, period. Makes it un-viable”17. 7. Conclusion The Internet allows firms to go beyond market segmentation to market fragmentation, dividing their markets into ever-smaller groups of customers – even tailoring their offerings to individual consumers (Robert, 1993). Last.fm have clearly embraced the internet and taken advantage of it’s unique capabilities; personalisation and scalability. In contradiction to Porter’s 2X2 competitive advantage scope, Last.fm is proof that companies can target both broad and narrow market segments whilst maintaining a distinct competitive advantage. Despite the fact that Last.fm has over 30 million users in 200 different countries, their Web 2.0 personalisation engine enables them to target highly specific user groups. This adds considerable value to the users music listening experience. Last.fm’s aggressive data mining practices are a key component to their recommendation engine which is in turn a key component of their value proposition. By offering their customers multiple integration points, users can listen to their music as they wish whilst remaining connected with the Last.fm network. It is this seamless integration that has secured Last.fm’s strategic position as the most popular music recommendation service in the world18 . However, Last.fm are facing significant challenges from the music industry who are eager to increase royalties considerably. In order to generate more revenue per user, Last.fm will need to change aspects of their 3 core business models. In particular, Last.fm will need to generate greater revenue from their advertising efforts. As suggested, behavioural advertising could be the catalyst in this area. Increasing the discrepancy between their free and premium service offering should increase the value proposition and help generate

COMMENTS

16

The Guardian 2009, Music sales decline for seventh time in eight years, 3 May 2009,

http://www.guardian.co.uk/technology/blog/2009/jan/01/music-sales-down.
17

Gigaom 2009, Last.fm, Pandora KO-ed by new royalties?, 4 May 2009,

http://gigaom.com/2007/03/05/webcaster-royalty-rates-go-up/.
18

Wikipedia 2009, Last.fm, 4 May 2009, http://en.wikipedia.org/wiki/Last.fm.
8 / 20

M A R K R E G A N

additional revenue through subscription fees. Finally, forging strategic affiliate partners could help generate additional ancillary revenue. The question remains, will personalised radio stations signal the end of traditional radio stations? Will last.fm negate the need for users to purchase traditional media such as CD’s and MP3’s? Will the internet and it’s unique capabilities create a paradigm shift within the music industry? The internet has certainly undermined the value of music, and given the proliferation of illegal downloading, the music industry needs to find new and innovative ways to monazite their content. Last.fm have adopted a radical new service model that has shifted the focus away from “music as content” and towards “music as a services". In doing so they have embraced the internet and taken full advantage of it’s unique capabilities. Final score: 18/20

COMMENTS

M A R K R E G A N

9 / 20

APPENDIX

COMMENTS

Fig 1

Fig 2

M A R K R E G A N

10 / 20

COMMENTS

Fig 3

Fig 4

M A R K R E G A N

11 / 20

COMMENTS

Fig 5

Fig 6

Fig 7

M A R K R E G A N

12 / 20

COMMENTS

Fig 8

M A R K R E G A N

13 / 20

COMMENTS

Fig 9
M A R K R E G A N 14 / 20

COMMENTS

Fig 10

Fig 11

Fig 12

M A R K R E G A N

15 / 20

COMMENTS

Fig 13

M A R K R E G A N

16 / 20

COMMENTS

Fig 14

M A R K R E G A N

17 / 20

COMMENTS

Fig 15

Fig 16
M A R K R E G A N 18 / 20

COMMENTS

Fig 17

M A R K R E G A N

19 / 20

BIBLIOGRAPHY
1. Webpages BBC 2009, Music site Last.fm bought by CBS, 28 April 2009, http://news.bbc.co.uk/1/hi/ technology/6701863.stm. Steve Krause : Blog 2009, Pandora and Last.fm: Nature vs. Nurture in Music Recommenders, 28 April 2009, http://www.stevekrause.org/steve_krause_blog/2006/01/ pandora_and_las.html. BBC 2009, Royalties threaten internet radio, 28 April 2009, http://news.bbc.co.uk/1/hi/ technology/6430489.stm. Apple Inc., Apple, iTunes Affiliate Program, 29 April 2009, http://www.apple.com/itunes/ affiliates/faq.html. Wikipedia 2009, Last.fm, 4 May 2009, http://en.wikipedia.org/wiki/Last.fm. The Guardian 2009, Music sales decline for seventh time in eight years, 3 May 2009, http://www.guardian.co.uk/technology/blog/2009/jan/01/music-sales-down. Gigaom 2009, Last.fm, Pandora KO-ed by new royalties?, 4 May 2009, http://gigaom.com/2007/03/05/webcaster-royalty-rates-go-up/. Last.fm 2009, Pandora KO-ed by new royalties?, 3 May 2009, http://gigaom.com/2007/03/05/webcaster-royalty-rates-go-up/. Website Grader 2009, Website Marketing SEO Tool Score, 4 May 2009, http://website.grader.com. Wikipedia 2009, Semantic Web, 4 May 2009, http://en.wikipedia.org/wiki/Semantic_Web. Adobe 2009, Adobe Flash Player Version Penetration, 3 May 2009, http://www.adobe.com/products/player_census/flashplayer/version_penetration.html. Last.fm 2009, Radio Announcement Revisited, 4 May 2009, http://blog.last.fm/2009/03/30/radio-announcement-revisited. Last.fm 2009, Media Kit, 4 May 2009, http://www.last.fm/resources. Wikipedia 2009, Last.fm Radio Announcement, 4 May 2009, http://blog.last.fm/2009/03/24/lastfm-radio-announcement.

COMMENTS

M A R K R E G A N

20 / 20

Sign up to vote on this title
UsefulNot useful