Apple's 30% fee is posing problems for a number of companies and developers - those who've built their businesses around the existing rules, for example, and those who don't have the margins to be able to hand over such a cut to Apple. Companies that have raised questions about the new policy run the gamut - music streaming services, e-book sellers, and software-as-a-service developers; big companies and startups alike.

The expletives that came from Last.fm co-founder Richard Jones last week may be one of the most colorful responses to Apple's announcement, but his analysis speaks to the core of many developers' concerns. Jones said in an IRC chatroom that "apple just f***ed over online music subs for the iphone." Jones hinted that Apple may have plans to launch its own streaming service and is therefore attempting to squeeze out the competition. But whether that's the case or not, he contends that "many services can't survive a 30 percent loss of revenue." Jones specifically mentions Spotify, reportedly poised to make its entry in U.S. markets, arguing that he can't imagine its "margins are anywhere near 30 percent."

Trouble for Alternative Funding Models

Readability just announced this morning that its iOS app had been rejected by Apple as the startup wasn't running its service through the new subscription plan guidelines.

Readability offers a service whereby it redesigns Web pages - stripping out ads and resizing text, for example - in order to make online content more legible. Users pay a monthly subscription fee to use Readability, which in turn offers a unique funding model for publishers - the company gives them a 70% cut of the revenue from folks' reading lists. "If we implemented In App purchasing," writes Readability in an Open Letter to Apple, "your 30% cut drastically undermines a key premise of how Readability works."

No Room in the Store for Big Catalogs

Jim Dovey, formerly the Apple Platforms Team Lead for the e-bookseller Kobo had raised another key stumbling block. As it currently stands, there's a cap on the number of items you can sell via in-app purchases. According to Dovey, Apple's "in-app purchasing system only allows 3000 or 3500 distinct items to be in your catalog (depending who you talk to). Kobo and Amazon each have around 2.5 million titles. Judging by the title of Kobo's app, 1.8 million are public domain (or otherwise free), so some 700,000 are paid titles, which they are under obligation to the content owners to make available for sale to all their users."

The dissatisfaction isn't only coming from developers or companies who've invested in the Apple third-party ecosystem. PaidContent.org reports that anti-trust regulators are looking into Apple's subscription plan. But in the meantime, angry developers are looking at their own alternatives.

As Readability notes in its blog post today, "To be clear, we believe you have every right to push forward such a policy. In our view, it's your hardware and your channel and you can put forth any policy you like. But to impose this course on any web service or web application that delivers any value outside of iOS will only discourage smaller ventures like ours to invest in iOS apps for our services. As far as Readability is concerned, our response is fairly straight-forward: go the other way... towards the web."

It seems likely that others will follow suit - putting their development efforts into the mobile web or into alternate operating systems (namely Android).

I've been syncing my music listening history from Rdio and Spotify to Last.fm lately, so it was really easy to click click click and boom - there's the official Twitter accounts of all the bands I've been playing on those services. You can also sync with iTunes or Pandora. After I followed the bands it discovered on Twitter, I put them in a Twitter List, which I can now visit whenever I want to see some music updates. Cool. Thanks, Tweetlouder.

Last.fm Radio will remain free via its website and desktop app as well as for U.S. and U.K. users of Xbox Live and Windows Mobile 7 phones.

Last.fm Radio offers a personalized station, playing full song tracks based on users' preferences. Currently, that streaming service is free in the U.S. and U.K. via an ad-supported app.

The change brings Last.fm in line with many other music services that charge you to listen to music via your mobile devices. The $3-per-month fee is less than Spotify's $9.99, but Last.fm does not let you play tracks on demand.

While this was obviously a major problem for the company to solve, I wonder: did you notice? I can't say that I did. I haven't scrobbled in months on end. I can't remember the last time I even streamed music from Last.fm. I've moved on to bigger and better things...have you?

According to the Last.fm blog post, the issue was caused by a hardware failure. Yesterday afternoon, a fault in a blade chassis in one Last.fm's datacenters broke, and took down the power supply for its rack with it. The onsite teams couldn't resolve the issue with the chassis, but managed to restore power to the rest of the rack. However, the chassis had contained several critical components of the top-level load balancing systems, which are used to evenly distribute traffic across Last.fm's data centers.

Because the remaining data centers were then running under a higher than usual load, outages began to occur. There were problems not only with the radio service, but also with scrobbling and the website itself.

Now, it's a matter of waiting for fresh DNS information to propagate around the Internet. When that occurs, the service will be up-and-running for everyone. Last.fm users should know that scrobbles are safe in the meantime, thanks to client caching.

So, Did You Notice?

Obviously, plenty of regular Last.fm users did notice the outage, and were tweeting about it over the past day. But for me, the outage only served to remind me that the service existed at all. I no longer care for streaming radio services like Last.fm - or Pandora, for that matter - I'm using a subscription based music service instead, where I can access (nearly) any song I want on demand, create my own playlists and browse through playlist suggestions from others. You want "cloud iTunes," you say? Well, you can have it now.

In my case, I'm using MOG, a subscription-based streaming music service preferred by a couple of us here at ReadWriteWeb. However, Rdio, a similar service from Skype, KaZaA and Joost creators Niklas Zennstrom and Janus Friis, is the better choice, according to many whom I've spoken to.

It comes down to what features you really need. Rdio, for example, will match your iTunes catalog with its own, providing easy access to your favorite tunes. It also offers better social networking features for sharing recommendations via Twitter and Facebook. And its mobile applications are well-designed and easy to use.

MOG suffers a bit in the design aspect of its apps, and according to some reports, their stability too, but its catalog is currently larger: 10 million tracks to Rdio's 7 million. However, these numbers change regularly, as record deals are brokered.  If you start to feel like you're missing the serendipity that services like Pandora and Last.fm offered, both MOG and Rdio provide a "radio" option that lets you stream music, but MOG's more configurable, much to the disappointment of some Rdio fans.

Although neither of these services are free, like Last.fm is, they're both definitely worth the money. And frankly, since the time I started using subscription music, I haven't been back to Last.fm at all.

But I wonder where the rest of the early adopters are with this. What are you using these days for streaming music? Are you still a Last.fm fan? Or have you also moved on to MOG, Rdio, or - if you're fortunate enough - Spotify? Or maybe you still prefer iTunes?

First entry into Extension's Labs is something the company calls The Super Awesome Music Blog Finder Thingy ™. Enter your Last.fm username and it will recommend new music blogs that have posted music from artists you've listened to the most over the last 30 days. It's not great, yet, but it could make a pretty great feature once more fully baked.

Unfortunately, the recommendations include too many low-quality spammy blogs, blogs that link to torrents (a little less easy to listen to) and generally need some refinement.

Extension.fm was founded by Dan Kantor, the creator of AOL-acquired Streampad and the feature in Yahoo's Delicious that renders links to MP3 files playable, and invested in this Spring by Spark Capital, Betaworks, Founder Collective (Caterina Fake, Chris Dixon and others) and Dave Morgan (founder of Tacoda and Real Media).

In other words, chances are good that something interesting is going to happen over there. If that includes recommendations based on data acquired from services all around the web and stored in a central repository, that's cool.

Infegy looked at a 10,000 post sample from the past 30 days to determine how the top music sites stacked up against each other.

Ping has been criticized as a half-baked social network where the real goal is to sell more songs on iTunes. An agreement with Facebook that would have made it more social fell through before the release. The service was quickly overrun with spam. All in all, it has not caught on with the fire of some of Apple's other products, and people simply are not talking about it. "With the exception of a huge spike on the day of its release, Ping chatter has been surprisingly low," Infegy said.

Graph of the amount of talk around social music sites.

So who do users like? The streaming site Rdio registered a distant last in terms of conversation generated, but 87% of the conversation it generated was positive despite the fact that it just launched last month and costs $4.99 per month. Rdio was founded by creators of Skype and the file-sharing service KaZaA, is integrated with Facebook, Twitter, Last.fm and iTunes.

Blip.fm, the streaming service that revolves around user-created playlists, was the most talked-about service, and 80% of the conversation was positive. Pandora, the streaming music recommendation engine, generated the second-most buzz, 81% of which was positive.

The real winner may be the free streaming service Spotify, which is integrated with Facebook and generates about as much conversation as Ping even though it is not available yet in the U.S. Spotify is available in seven European countries, but its launch in the U.S. has been delayed by legal negotiations. Spotify has faced negotiation delays but is aiming to launch in the U.S. in 2011. Conversation about Spotify was 82% positive, 14% negative and 3% mixed.

Do you use Ping or Blip.fm? Which social music sites do you prefer?

While Pandora "has been on the verge of death, struggling to find investors and battling record labels over royalties," according to the Times' profile, a recent move by Warner Music may help to put one Internet radio station above the rest.

As Tom Conrad, CTO for Pandora, told us last month when Warner announced it would pull all of its licensed content from streaming music services, "Pandora operates under a different licensing structure and won't be impacted by Warner's apparent decision with respect to free, on-demand services." This could be huge in keeping Pandora on track to break $100 million in revenue this year, as predicted by William Blair, a digital media analyst, in the Times article.

The Times compares Pandora with other services, such as Slacker Radio, noting that Pandora has one third as many songs but three times as many listeners. We can't help but wonder if the absence of Warner's discography might further imbalance this scenario in Pandora's favor.

Update: Slacker Radio has informed us that they too will carry Warner Music titles. This is from a note from a member of Slacker Radio's PR team:

Slacker has and has had since day 1 voluntary licenses with all major labels and 100's of Indie labels. Slacker negotiated deals and then built a business around those rates. We have good relationships with Warner and voluntary licenses with them. We do offer and will continue to offer music from Warner.

According to last month's article in the BBC, however, services like Spotify and Last.fm could be in trouble of losing a large portion of their music library.

While the sheer number of songs is obviously not the deciding factor here, it could be a big one. With control over artists from Frank Sinatra to the Bee Gees to Puff Daddy, Warner's music catalog could be the distinction between life or death for any online streaming music service. And now, with deals with automakers and consumer electronic manufacturers, it looks like Pandora is here to stay.

And as the Times points out, with last month's hiring of CFO Steve Cakebread, the company looks poised to go public in 2010. In the meantime, we wonder what will come of the competition when Warner music officially pulls the plug and leaves them without a "Stairway to Heaven".

As time has gone on, we've found fewer and fewer reasons to actually download music and ExtensionFM gives us one less.

Kantor pre-released the music plugin just over two weeks ago with little to-do, but we can't get enough of it. ExtensionFM runs quietly in the background as you browse, collecting any and all tracks and archiving them. If you decide you'd like to listen as you go, you can simply click on the icon and play individual songs, queue songs, or play or queue them all. If you decide that you like a song enough to own it, you can simply right click on it and chose "Buy", which sends you to the song on Amazon. But even if that were to not work, the program keeps the link to the site where it originally found the song.

Then, when you switch over to the full screen extension, all of the tracks you've discovered while browsing are neatly organized by artist, album, track name and even the site where it was originally discovered, with a link, so you can go back and find out more about tracks you like.

When you first start up ExtensionFM, it has six featured sites, including Spinner, Live Music Archive, Pitchfork, Stereogum, Daytrotter and Tuneage, making it easy to get going.

What's even more, ExtensionFM will let you "scrobble" to Last.fm, which means it will follow along and keep track of your music listening habits and send them to your Last.fm account.

We got in touch with Kantor this afternoon and he told us that he does have plans to make ExtensionFM available as a Firefox add-on at some point in the future, but for now it is only available for Chrome. He also said that right now, music can only be played when the user is online, but that offline playing is another feature they're looking into.

Because we have a supply of just 50 beta invite codes, we've put information on how to get your invite on our Facebook page. Head there now to be one of the lucky few, and if you're so inclined, we'd love it if you added us to your Facebook friends, as well!

2. Deezer: Deezer offers users free and legal streaming music while sharing advertising revenue with artists and rights owners. The site launched with a Sony BMG partnership and signed a Universal Music deal in 2008. Users can share their favorite music by connecting with friends within the social network, or embedding playlists in 3rd party sites.

3. Spotify: Heralded as one of the best music streaming experiences on the market, Spotify is only available in the UK, Sweden, Norway, Spain, France and Finland. TechDigest TV uploaded a fantastic looking preview of Spotify's much anticipated iPhone app.

4. Tunerec: Swedish company Tunerec allows users to create music libraries and playlists from recorded radio play. Because libraries are taken from recorded music, it takes a while to populate playlists; however, according to RWW's initial review by Frederic Lardinois, the service is worth the wait.

5. Last.FM: If you haven't heard of Last.FM, you've probably been living under a rock. The site offers users the ability to create radio stations and stream them complete with AudioScrobbler-powered recommendations.

6. Pandora: To the user, Pandora and Last.FM are similar recommendation-based radio services; however, where AudioScrobbler makes statistical inferences, Pandora's recommendations are determined by the Music Genome Project's 400 distinct musical characteristics.

7. Slacker: Slacker is another popular radio recommendation service. Users input tracks and receive recommendations. Slacker first launched with custom mobile hardware and has since expanded onto other mobile devices.

8. The Hype Machine: This is a fantastic service for those willing to leave music selection to the experts. Like other sites, this one allows listeners to search for music and stream playlists; however, the files on the site are actually streamed from the blogs of top labels, DJs, promoters and music start ups.

9. Blip.fm: Blip.fm is another site where music lovers can access millions of streaming songs. Members receive their own station and the ability to share station programming responsibilities with friends. The site also offers integration with blogs, Twitter, FriendFeed and Last.fm. The act of blipping refers to the act of linking to a song and attaching a 150 character comment to it.

10. MOG: MOG is a music blog network that encompasses more than 300 blog posts per week. The site offers an in-depth look at new artists and includes music recommendations, videos and streaming audio clips. A good place to start with this service is to play audio from it's Recently Popular Posts page.

11. Lala: Lala also offers users a playable web browser interface. The service contains 7 million free online songs and the ability to purchase additional web songs at 10 cents each or downloadable MP3's for 80 cents and up each.

12. Imeem: Imeem is considered "the new social mixtape". The streaming music site allows users to create playlists and share them across the web. RWW recently covered Imeem's iPhone and Android launch.

13. SoundCloud: SoundCloud also allows users to upload tracks and share them via the cloud. Listeners receive shared files via an email-style interface. From there, they can choose to either play the music from the site or download the tracks they've received from friends.

14. 8Tracks: This service lets users upload 8 tracks as a playlist and share the playlist with friends. This service is essentially what Muxtape used to be.

15. Muxtape: Muxtape has transformed from one of the early mixtape-style music sites (users uploaded and shared playlists) to a directory of bands. It remains a great place to discover indie bands.

16. Project Playlist: Project Playlist indexes music from across the web. Again, users create playlists and share links to music files with their friends. Reviewers see this as one of the best music search engines in existence.

17. Skreemr: Skreemr is also a search engine and music indexing site. It claims to offer users access to "6 million mp3 files from over 100,000 web sites".

18. Fizy: Similar to the now defunct Seeqpod, Fizy is an extremely bare bones approach to streaming music with a simple search bar. Like Seeqpod, the site offers speedy music video results and audio results, and unfortunately, legally questionable content. Perhaps the site's recent acquisition will change that.

On the Horizon: Microsoft is set to launch a streaming music site at the end of July. For more info on this project check out our coverage.

Can Microsoft find the right balance of monetizing music without being over-bearing, enabling multi-platform use without being confusing and satisfying millions of mainstream users without being boring? Those seem to be the looming questions.

Could Seeqpod Be Under The Hood?

It's possible that the new project is being rolled out quickly because it's built on acquired technology. This Spring there was widespread speculation that Microsoft had acquired failed but awesome MP3 search engine Seeqpod. Seeqpod did a great job searching for media around the web and offered an API that developers liked quite a lot - but the company got slammed by repeated lawsuits. Seeqpod argued that it was only indexing media files that other people were posting, not posting them themselves. That kind of argument tends to hold up best when you are big enough for music companies to look the other way. Surely Microsoft wouldn't be so bold, would it?

Bale says the new Microsoft music service will compete based on scale and quality of product. If it can simply deliver more variety than Pandora or Last.fm do, that alone will make it a viable competitor for many users.

The service now also shows display ads on its website, which, to be honest, don't seem to fit into the general design of the site and look like they were just added for the sake of it.

In the Bloomberg interview, Westergreen also acknowledged that Pandora's struggle with the music industry to negotiate royalty rates could still stop the company from becoming profitable, though Westergreen also said that he is optimistic that these negotiations will come to a positive conclusion for Pandora.

With this new emphasis on stations, Last.fm also redesigned the 'recent stations' section in order to allow users to see far more of their recently created stations. Users can now also easily delete stations from this same dialog.

While the new visual features are a welcome change to Last.fm's online radio, the real game-changer here are the multi-artist and tag stations. These allow users to create more interesting and diverse stations, while still exercising a large amount of control over the content of these stations.

Sponsors

It is also important to note that the radio player now features visual branding from Last.fm sponsors (Budweiser seems to be the current sponsor). In its press release, Last.fm stresses that this new layout will give advertisers and sponsors the ability to create a more immersive experience than standard audio advertising.

Privacy Mode

The new player also features a private listening mode, where scrobbling is turned off so that you can listen to your favorite Jonas Brothers songs in total privacy.

iPhone App Still Lagging Behind

Hopefully, Last.fm will also soon update its already excellent iPhone application to include these new features as well. Although, today's announcement did not mention the company's mobile applications at all.

It's a dramatic move that could pave the way for other media companies to do the same and effectively open up international markets. People complain, but do you think that viewers would pay a similar monthly fee for international access to Hulu, for example? We do.

We're still waiting for examples of US customers willing to pay for online services (the iPhone app store is a related example) but it will be interesting to see if the rest of the world is. Last.fm's announcement is an interesting response to the advertising market's belief that only eyeballs from certain countries are "worth" advertising to.

Meanwhile, the vehement insistence by users that every damn thing on the web be free works hand in hand with the rise of over-saturation in advertising. Let's see what kinds of user experience, features and services we can get by paying a little cash - shall we?

Overall, Slacker feels a lot like satellite radio, which is probably no surprise, given that XM Radio's co-founder Lon Levin is Slacker's Senior Advisor.

With regards to its user interface, every Pandora and Last.fm user will feel right at home. One nice addition to Slacker, though, is the ability to see which songs will play next.

Customization

One advantage of Slacker over its competitors is that it gives you more options to directly customize your stations. You can direct it to play songs from different decades, and decide if you want it to mostly play hits or also more obscure songs.

Competition

Slacker's reviews and biographies can't quite compete with the depth of information offered by the Last.fm app, which can also display tour dates. Slacker also doesn't feature any of the social networking functions that have made Last.fm so popular.

Just like its competitors, Slacker only allows you to skip six songs per station every hour. Unlike Pandora and Last.fm, however, Slacker does play 30 second radio ads after every fifth song. For $3.99 a month, however, you can buy a premium membership that lets you skip songs as often as you want and which removes the advertising from your stream.

Like all the other streaming music apps on the iPhone, Slacker can't play in the background while you surf the web or read your email. This, of course, is a limitation that Apple has put on its developers, even though Apple's own music player on the iPhone does this without causing any problems.

Verdict

Even though Slacker Radio is very similar to the Last.fm and Pandora app, we think it is definitely worth a try. Whether you prefer one over the other will depend on how happy you are with the music recommendations it gives and how important the social features of Last.fm are to you.