Sorry for the slight delay in posts - I got distracted last week by Twitter. I'm not going to blog about it, as I think it's pretty much been done to death, but I am of course going to say that you can follow me here.
So while everyone else has been blogging and writing articles about Twitter I thought I'd be unoriginal in another direction and return to the subject of Last.fm. I wrote about them a few weeks ago, comparing them with Spotify, and at that point I didn't touch on the costs of both, because I was mainly interested in the different ways I was using them to listen to music.
Last week though Last.fm announced that as of Monday 30th March it would now be charging users outside of the UK, the US and Germany to access its radio players. (As I type this at midday on the 30th it's still working here in Helsinki, but I don't know for how much longer..) Their reasoning is that they're not making enough advertising revenue outside of these areas to continue to provide the service for free. I'm not going to go into the ins and outs of the decision, I'm just going to say that the way they've handled this issue has been a complete public relations disaster!
By simply announcing the change, and with very little notice, they've made some of their listeners feel as though they're less important than others. Now from a strictly financial point of view this might very well be the case, but in essence people's feelings have been hurt and they're taking it out on the company in forums, blogs and anywhere else they can give Last.fm a good online kicking.
The nature of online businesses makes them much more susceptible to this kind of customer response - because there's no face-to-face human interaction people can be much more abusive than they'd be in person. I doubt the personnel at Last.fm would have been called racists to their faces in quite the same way they have been online (check here for the latest!). Also, because there's no physical, human relationship going on, customer loyalty is much lower than in the "real" economy. When Woolworths closed last year and the shops went from the English high streets I, like many others, felt a pang of regret. If Last.fm, or imeem, or whoever joins SpiralFrog as the latest failure, were to shut down I wouldn't care, I'd just move on to the next place. And at a less terminal level, when they start charging for something that was previously free, I can just move on to the places where it still is.
It comes back to something I wrote about last time; the importance of treating the people you're interacting with as equals. Even if you do have to make a necessary change to your business model you really need to communicate it in a way that makes the people using the service feel respected and valued.
If possible, of course, it's also much better to get these things out in the open at the beginning of the venture. Contrast Last.fm with Spotify who have had a discriminatory pricing policy from the beginning based on which country you happen to be living in. No-one has complained too much about this, because it was understood at the outset that this was their business model.
I think the lesson is that companies have to be entirely honest and transparent from the start. As a potential customer I'd respond well to any company that said - "We're not sure how this is going to work yet, we want some people to beta test this thing, and in return we'll reward you with some kind of benefit depending on what our business model turns out to be. If we can attract x-many users and sell x-much advertising it'll be free, otherwise it'll cost x-much to subscribe, and we'll keep you posted as we go. Who's interested?"
OK, I"m going to get back to listening to Last.fm until it stops working to get my..er..money's worth..
Chris
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