Last.fm Acquisition Too Pricey For UK’s Radio-Only Players

This Guardian op-ed wonders how UK radio operators let CBS get away with London’s own Last.fm: “On the day the deal was announced, Fru Hazlitt, MD of GCap’s Capital Radio, was the latest radio executive to announce ambitious web plans for her group’s central radio brands. That begs an obvious question – why did GCap, and the rest of UK commercial radio, allow Last.fm to be snapped up by a major US broadcasting corporation?

The real reason is probably cost. GCap’s own effort personalized radio, Mi-Xfm, is due to be rolled out across its network of stations. But many of those stations’ websites have limped along for the last couple of years and GCap’s piggybank has been drained by a fall in UK radio ad spend, leading to a nine percent overall revenue drop last week. Desperate to accelerate online growth, Hazlitt could only muster an additional £2.1 ($4.5) million (on top of £2.5 ($4.9) million for online this year and £5.9 ($11.6) million next) to overhaul the websites’ architecture while making them “best-in-class music destinations” with artist databases, video, communities etcetera, hirings included. Not insignificant, but many times smaller than the $280 (£142) million CBS splashed on Last.fm, which is itself smaller than previous estimates. With plans to extend Mi-Xfm and add on-demand features this year, GCap’s strategy clearly seems “build” — not “buy.”