Last.FM: Mashing to the Music

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He and co-founder Martin Stiksel jumped on a train to Southampton and met Jones in a park to discuss the possibilities. Miller's pitch was simple: "We already have some buzz, we need your data." They soon agreed to join forces, with Jones coming on board as CTO.

Last.FM relaunched in the summer of 2003 as a mashup with Audioscrobbler and began to take off. As the Friendster phenomenon hit that year, Last.FM started adding social networking features that let users post photos and profiles and find out what their friends were listening to. In the Web 2.0 world, says Josh Bernoff, principal analyst at Forrester Research, rankings, recommendations, and other such features are often nearly as important as the content itself.

Users also played a big role in Last.FM's evolution. They demanded direct downloads, local concert schedules, and band bios. When requests for new features overwhelmed Last.FM's small staff, the company made the bold decision to create open interfaces to the site, and soon independent developers began piling in with enhancements.

Brave New Worlds

Now there are sites such as Ilovemusicvideo.net, which plays music videos from YouTube over a Last.FM stream, and SnappRadio, which pairs a Last.FM stream with band photos from Flickr.com. The beauty of the sites is that they all feed new data to Last.FM—and draw in new users.

"It's a great way for Last.FM to make its data more valuable," says Paul Lamere, a software engineer at Sun Microsystems (SUNW) who created SnappRadio. "They start to build this little ecosystem around their data, and now there's a whole economy built around it."

Mashing With the Enemy

Since Index Ventures invested in the company, Last.FM has beefed up its staff to 25 and rolled out a raft of new features. The company won't reveal its revenues or whether it is profitable, but says it makes money from advertising, premium subscriptions, and commissions from sales of CDs and concert tickets and from downloads. Advertising and premium subscriptions are now the majority of Last.FM's sales, Miller says, but he expects commissions to increase as users get more comfortable buying from the site.

Is Last.FM finished mashing? No way. Recently an outside developer created a mashup called Pandora FM that crosses Last.FM with Pandora, its rival in personalized audio streaming. Miller says he's not the least bit threatened by the move, because a link with Pandora merely increases Last.FM's reach and its reservoir of user data. In the wonderful world of mashups, even your enemies can become your friends.

Carlin is a reporter in BusinessWeek's Paris bureau.