Mike Butcher

As hinted at back in February, Last.fm has been trawling around looking for a buyer and today it found its harbour in the form of a US media giant. The 'social music' site has been bought by CBS Corporation for $280m (£140m). This is less than the earlier rumour, but still the largest-ever buyout of a UK-based "Web 2.0" site.

The site was founded in the UK five years ago (you may have heard the stories about the founders sleeping on the office roof in a tent when they couldn't afford accommodation). It now has more than 15 million active users. Users basically connect with other listeners with similar music tastes, build their own personal radio stations and watch music video-clips.

Although the announcement today says that Last.fm's managing team (founders Felix Miller, Martin Stiksel and Richard Jones) will stay and the site will maintain its own separate identity, I can't see this staying this way forever, now that it's part of CBS, which will probably ditch the European sensibility of the service.

Stiksel reportedly said: "This move will really support us to get every track ever recorded and every music video ever made onto Last.fm." He also says LastFM will "put the users in charge. CBS gets this." Time will tell, time will tell.

Meanwhile for the less cynical among you, here is co-founder Richard Jones on the company blog today:

"The team here have spent a lot of time this year discussing what the future should hold for Last.fm, and while contemplating raising some additional venture capital we were approached by CBS. As you can imagine, we have been approached numerous times in the past few years from all the usual suspects regarding acquisitions and so on; CBS are one of the few companies who needed no explanation of what we are doing, and we were impressed at how progressive their plans are. This deal with CBS gives us a chance to really make Last.fm shine, and gives us more flexibility than other funding options would for doing all the crazy stuff we’re had scribbled on whiteboards for years."

So why did CBS buy it? CBS radio is the largest radio group in the United States, with 179 stations in the top 50 markets, but traditional media growth is stagnating and all the action – as everyone knows, especially when it comes to music and the youth market – is all online. The purchase thus adds to an advertising portfolio that already includes conventional radio, broadcast and cable TV and outdoor services.

CBS now has a strategy of reaching as big an audience as possible, not on creating content. It sounds like they plan to rely more on the users and viewers themselves to do that. In fact, CBS CEO Leslie Moonves says Last.fm's community play us "central to CBS". In truth CBS is coming late to the now established idea that music is a natural community builder and therefore a very 'sticky' eyeball attractor. As an anonymous CBS executive has already said: "We see it as a chance to get new eyeballs — or in this case earlobes."

As for the price, it looks easily affordable by US standards. Consider some earlier deals: News Corp bought MySpace for $580m (£290m) in 2005. Google paid $165bn (£82bn) YouTube in 2006. But according to the LA Times, the final price for closely held Last.fm could rise substantially if performance targets are met. Last.fm got its first round of funding last May from Index Ventures.

There may be a problem for LastFM in that in the US the recent ruling by the Copyright Royalty Board massively increases the royalties Internet broadcasters have to pay for streaming digital songs. This has already hit Pandora's plans to expand outside the US.

However advertising may offer more hope. Although LastFM recommends music for purchase, sales are not in fact a big revenue earner. Instead CBS will probably create sponsored channels, garnering bigger corporate deals with its existing sales contacts.

Expect also CBS radio stattions to start to appear on LastFM. Country AND Western anyone?

No wonder Google has acquired RSS management service Feedburner. FeedBurner publishes feeds for PC World, Computerworld, Macworld, Reuters, USA Today, AOL, Newsweek and many many more big and small publishers. That means the bulk of the content from these sites passes through Feedburner, and what does Google love? Content and data, but especially eyeballs. According to TechCrunch (following an unconfirmed rumour on Vecosys) Feedburner is in the closing stages of being acquired by Google for around $100 million in cash. Google has effectively bought Feedburner to get into the RSS Ad market. The growth market for ad inventory – though still small outside of the tech sphere – is increasingly found in people reading site content via start pages like Netvibes, RSS services like Bloglines or RSS readers like NetNewsWire. These people never visit the actual sites, and yet their content needs to be monetised somehow. This is a threat to AdSense, which only appears on sites, not feeds. The answer? Buy a service like Feedburner, which had already set up its own advertising service. Bully for them.

No wonder Google has acquired RSS management service Feedburner. FeedBurner publishes feeds for PC World, Computerworld, Macworld, Reuters, USA Today, AOL, Newsweek and many many more big and small publishers. That means the bulk of the content from these sites passes through Feedburner, and what does Google love? Content and data, but especially eyeballs. According to TechCrunch (following an unconfirmed rumour on Vecosys) Feedburner is in the closing stages of being acquired by Google for around $100 million in cash. Google has effectively bought Feedburner to get into the RSS Ad market. The growth market for ad inventory – though still small outside of the tech sphere – is increasingly found in people reading site content via start pages like Netvibes, RSS services like Bloglines or RSS readers like NetNewsWire. These people never visit the actual sites, and yet their content needs to be monetised somehow. This is a threat to AdSense, which only appears on sites, not feeds. The answer? Buy a service like Feedburner, which had already set up its own advertising service. Bully for them.

There doesn't seem to be much rhyme or reason why there are more Germans in Second Life than Americans even though there are more American firms advertising inside the virtual world. Could it be down to better broadband in Germany? For now we'll have to ponder the results of a new Comscore study which finds that Second Life has a rapidly growing and global base of active residents.

The report found that about 1.3 million people ran the official software and logged-in to Second Life in March 2007, an increase of 46 percent in the number of active residents from January 2007.

On the face of it this sounds like rapid growth, but while the report found that only 207,000 people in the United States logged on to Second Life at least once in March, 'at least once' means they may never have come back – we just don't know.

At any rate, Second Life appears to hotter in Europe right now. In March, 61 percent of active Second Life residents were from Europe, compared to 19 percent from North America, and 13 percent from the Asia Pacific region. Perhaps predictably, 61 percent of residents were male while 39 percent were female.

In fact there are 209,000 Germans – 2,000 more than the US – inside Second Life. The UK is on 6 per cent, or 72,000.

This starts to get interesting when you realise that many of the businesses trumpeting a presence in Second Life are actually US-based: IBM, CNet, Reuters, American Apparel, Coldwell Banker etc. Where are all the German brands?

TechCrunch is unimpressed with these figures and compares them with the billions of pages and unique users experienced by MySpace users – for example – every day.

And it's also worth remembering what social software professor Clay Shirky wrote back in December last year:

"Second Life may be wrought by its more active users into something good, but right now the deck is stacked against it, because the perceptions of great user growth and great value from scarcity are mutually reinforcing but built on sand. Were the press to shift to reporting Recently Logged In as their best approximation of the population, the number of reported users would shrink by an order of magnitude; were they to adopt industry-standard unique users reporting (assuming they could get those numbers), the reported population would probably drop by two orders… There’s nothing wrong with a service that appeals to tens of thousands of people, but in a billion-person internet, that population is also a rounding error. If most of the people who try Second Life bail (and they do), we should adopt a considerably more skeptical attitude about proclamations that the oft-delayed Virtual Worlds revolution has now arrived."

Here are some breaking views on the reported merger between Yahoo and and Microsoft today:

WSJ: "A year ago, Microsoft Corp. and Yahoo Inc. explored the idea of combining to form a greater competitor to Google Inc. The talks led nowhere leaving Microsoft and Yahoo to forge their own paths in pursuit of Google. How did they do? Well, they're talking again."

The Times: "Shares in Yahoo! jumped 18 per cent in pre-market trade in New York today on reports that Microsoft is once again weighing a bid for the embattled internet giant and has asked for formal talks to be renewed."

ZDNet: "Let's connect the dots on how this story developed. As Mary Jo Foley reported yesterday Microsoft is trying to transform into an advertising company. Meanwhile, Foley also noted that Yahoo Terry Semel is speaking at a Microsoft-run advertiser confab. Those dots are pretty easy to connect–both dots are the size of the moon. With those two items, all you have to do is regurgitate some old rumors, find a banker to speculate, toss in some background and poof you have a story."

Mashable: "Where’s the synergy? Yahoo has had much more success on the web than Microsoft, and Google increasingly looks to challenge Microsoft with online office apps. There’s search, too: the two companies combined would command 27% of the search market against Google’s 65%. And of course there’s advertising, where Google is also dominant and Yahoo is building out Panama."

UPDATE: Later in the day it emerged both firms were coming around to the idea that they were better off as partners rather than merging, and that they would actually end up with less users after a merger. No kidding.

Celltick (the mobile content firm headquartered in London) is to help AIS Thailand (the largest mobile operator in Thailand) to expand its content discovery service, mLive! to reach 8 million subscribers by the end of the year. mLive! broadcasts streams of content teasers directly across the idle screen of user’s mobile phones like a screensaver, with subscribers offered “personalized content and promotions”. mLIVE! users see streams of free news headlines, sport reports, weather updates, music stories, gossip, horoscopes and games as well as prize winning trivia and quizzes directly on their idle screens. The messages appear silently only when the phone is not in use, letting users access a variety of content and data services with a two-click reaction. Sponsored content and cross media campaigns form the main content. AIS says that during its first year of operation over 40% of subscribers used mLIVE! on a monthly basis, with over 300,000 downloads a day. The service will become available for 8 million users by the end of the year and then extended to the majority of AIS users. Celltick says its services are used by 30 million subscribers around the world already and it has an R&D centre in Israel and offices in China, India, Russia and Latin America.

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AIS Thailand, the largest mobile operator in Thailand, plans to expand its content discovery service, mLive! to reach 8 million subscribers by the end of the year, according to the firm. Powered by Celltick (headquartered in London), mLive! broadcasts streams of content teasers directly across the idle screen of user’s mobile phones, with subscribers offered “personalized content and promotions”. AIS says that during its first year of operation over 40% of subscribers used mLIVE! on a monthly basis, with over 300,000 downloads a day. The service will become available for 8 million users by the end of the year and then extended to the majority of AIS users.

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YelloWikis may capitulate to Yell over their recent legal action due to lack of funds to fight a prolonged court battle. In an email interview with tbites, YelloWikis’ Paul Youlten said (words in bold are tbites’ emphasis): “We have to reply to their charges by next Monday and we are planning to deny the charges of “passing off” – though some solicitors seem to think that we will win quite easily, others think Yell have a very strong case. So our objective is to resolve the whole thing as quickly as possible – just because we can’t afford to fight them. We might have to agree to all their demands in order to avoid damages. It would be a sad to hand over the domain names…. Shetlopedia would seem to have just a good a claim to them too.” Youlten also said he had “had an offer of help from Jimmy Wales” Wikipedia founder.

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The world's biggest yellow pages publisher, Yell, has threatened to shut down Yellowikis, the wiki-based yellow pages directory, accusing it of of "misrepresentation", "passing off" and suggests that using the name Yellowikis could "constitute an 'instrument of fraud'. It's contacted Yellowikis co-founders Paul Youlten and Rosa Blaus (his 15 year-old daughter) demanding they shutter the website, transfer the domain names to Yell and agree to pay damages to Yell for loss of profits. Yell made $2.4bn in 2005. Yellowikis had a loss of $500 last year. Youlten is contesting the action, and, somewhat reasonably, argues that people find small businesses via Google these days, not Yell. Perhaps Yell should sort out it's search engine marketing, rather than picking on tiny Internet starups. Yellowikis has reportedly been growing at 8.7% month-on-month and has 494 editors and about 5,000 articles listed – Yell, by contrast has classifieds running into the hundreds of thousands, if not more. Yet when was the last time you saw a search result with Yell in the URL? Perhaps that deal with Google Maps in April last year wasn't so great after-all…

Technorati Tags: Mediabites