Strengths:

- Apple approach: a)great product, b)simple usability, c) clear communication

- Dual-contact touch screen, twice the resolution of average computer screen, full-detail web pages with easy zoom-in feature, easy-view photo software, extra Google maps functionality (traffic details, fake GPS), easy music/phonecall switchover via headphone button, integrated email, phone and web features and other technological advancements will appeal to early adopter Apple fans

- Relies on tried-and-tested iTunes software – already a hit with consumers

- Easy to activate iPhone at home using iTunes

- YouTube link-up allows users to view videos over WiFi

Weaknesses:

- Apparently no way to record video – so no instant uploads to YouTube

- Sealed-in battery. Must send it back to Apple for a replacement.

- No memory card slot

- Over-the-air content delivery not part of initial iPhone plan (although not a critical concern: for every iPod bought, only 20 tracks on average are iTunes purchased, most are transferred from CD or illegally downloaded)

- Strength/Weakness: High price point ($499/$599 at launch) will only attract early adopters (J.D. Power: Typical U.S. phone user in 2006 paid $94 for a mobile). Although, for the initial model, perhaps early adopters are the sole target market (modest Apple sales targets of 10M globally by 2008, less than 1% of the mobile handset market)

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?

If the rumour that T-Mobile is in the front line to take the iPhone in Europe then the new rumour that the Apple iPhone will also be available on a pre-paid contract is pretty interesting. The Boygeniusreport.com says they got a few screen shots sent to them which show internal AT&T account codes showing the iPhone available to Pay As You Go subscribers with AT&T in the US. This would widen the market for the iPhone considerably, especially in the US where customers are generally locked into contracts for a long time. If the iPhone is pre-paid in Europe then expect a massive run on the phones – and yet more power to the iTunes music store.

Update: TechCrunch has news that Pandora will release a mobile device powered by Zing.

Whatever happened to Angel Gambino, she of “MTV 2.0″? Well she’s been hired by Bebo to a new position of VP-music. Bebo is interested in rivaling MySpace in the music stakes. Until January this year she was VP commercial, strategy and digital media for Viacom in the UK, where she worked across 11 channels, and was previously controller of business development and emerging platforms at the BBC. Gambino announced the move on her blog. Bebo claims to have 450,000 musicians already and last month partnered with online music retailer 7digital to allow independent artists to sell their tracks.

Instead, some bands are starting to bypass the whole record industry infrastructure (MySpace included), with some evidence of success. Koopa, a punk band, recently made it into the UK top 20 charts based on their sales via IndieStore.com – which is now hooked-up to the official chart system.

Indiestore enables artists to build their own download store, earn cash from the sales of their tracks and secure a chart position in official charts in the UK, US and 20 other countries. In addition, artists can promote their gigs and stay in touch with their fans on their own indiestore. Bands receive 80 per cent of money from sales.

The UK-based Bandwagon, too, has the advantage that people can download a single from the site and it will be chart eligible.

Now Bandwagon has launched a Millionpoundjukebox.com. This plays a jukebox of a random track from Bandwagon bands, and displays pixels which you can buy to advertise on the page (via paypal).

So the deal is: over a 12 week period, 120 bands will be streamed through the jukebox; 10 tracks from different artists will be playlisted and streamed each week; an industry led A&R panel will chose 20 winners at the end of the period; each winner will receive £25,000 for development (music videos, publicity). (My favourite so far is Lucky Soul, but then I always like music which sounded like The Cardigans!)

You can get a feel for how these sites are doing from Alexaholic. There, you’ll see IndieStore has had the most traction so far. However, it’s worth reminding you that page traffic figures on e-commerce sites have never been that useful a measure.

Meanwhile, the opportunities to sell or push your own music online have never been bigger. Just check out Soundclick, CDbaby and Garageband to get a flavour. Soundclick, which offers free music, is the biggest of these obviously. Here’s a traffic comparison.

Koopa is the first unsigned band to land a top 40 single — “Blag, Steal & Borrow” — that is available only by downloading it on the Internet. The breakthrough followed changes to the chart this month that mean no physical version of a record is required for the track to qualify.