CBS pays £140m for UK site Last.FM to cash in on social networking
Thursday, 31 May 2007
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Last.FM, the London-based music-recommendation internet site, has been snapped up by the US media giant CBS for £140m in cash, the largest-ever acquisition of a UK social networking company.
Although the sale price is dwarfed by recent deals such as NewsCorp's $580m (£294m) acquisition of MySpace and Google's $1.6bn purchase of YouTube, it beats the £120m ITV paid to buy the UK social networking site Friends Reunited in 2005. The deal also ends months of speculation about the future of Last.FM with Viacom rumoured to be interested in purchasing the UK firm.
Last.FM has built a network of 15 million active users across 200 countries since its launch four years ago and is one of a clutch of online music companies to offer fans a new way of finding music based on the user's tastes.
The site works by building a profile of a user's preferences based on the songs they choose to listen to via streamed radio or through their own computer or MP3 player. The site then uses the information to recommend, or "scrobble", music that the user might also like and displays the track-lists on a personalised website that can be linked to other users with similar tastes.
Thus the site could detect that a user who listens to Johnny Cash might also like other country artists like Hank Williams or Willie Nelson. The user can then build a customised radio station or start to chat to other users on the site to share opinions or swap tips about other artists. The site also lists events, recommending 200,000 festivals and concerts around the world.
Martin Stiksel, who founded the company with Felix Miller and Richard Jones, said that Last.FM had reached "a crossroads" and had to decide whether to seek more venture capital funding or to become part of a larger media company to take it to the next level. He said that the sale of Last.FM to CBS would enable the company to expand into the burgeoning online video market, and to explore ways to use its technology outside the music industry. "Our platform could ultimately apply to all forms of media," Mr Miller said.
The sale of the site will make the three founders millionaires. While Mr Miller and Mr Stiksel were already involved in the music industry, the 24-year old Mr Jones is set to get £10m as a result of the sale after living in a tent on a friend's balcony in Whitechapel while developing the scrobbling technology. The trio will stay with Last.FM after Mr Stiksel said that the site would be run as an independent unit within CBS's vast media empire.
CBS, which has also invested in the online television provider Joost as well as around 25 other online companies, said the site would enhance its ambition to appeal to younger viewers. Leslie Moonves, the head of CBS, said: "Last.FM is one of the most well-established, fastest growing online community networks out there."
