Streaming music service Pandora has entered into an ad sales partnership with a subsidiary of media conglomerate Clear Channel, a move that should help ensure the service's long-term financial viability but will likely lead to more ads in the stream and criticism of the independent company for getting in bed with the widely disliked mega-firm.

AdAge provided in-depth coverage of the partnership in a report this morning. A zoom out to look at the criticism that Clear Channel has faced and how this impacts music fans is worthwhile as well.

Clear Channels' alleged monopolistic practices have long been criticized in a variety of related industries, including billboards, concert venues and radio stations. The company's image as a faceless corporate bureaucracy dangerous to the well being of local communities is well illustrated by anecdotes like the following, from Project Censored's most under-discussed stories of 2004 collection:

"In January 2002, a train carrying 10,000 gallons of anhydrous ammonia derailed in the town of Minot, causing a spill and a toxic cloud. Authorities attempted to warn the residents of Minot to stay indoors and to avoid the spill. But when the authorities called six of the seven radio stations in Minot to issue the warning, no one answered the phones. As it turned out, Clear Channel owned all six of the stations and none of the station's personnel were available at the time. "

The company's extensive ownership of radio stations has also raised concerns about censorship. After September 11th, 2001 the company famously circulated a list of songs to all its stations that it said should only be played after great thought, including Tom Petty's "Free Fallin'," Louis Armstrong's "What a Wonderful World" and the entire Rage Against the Machine discography.

Those are but a few of the many criticisms of Clear Channel. Some users will no doubt be concerned that the same culture will now influence Pandora. That deal will only concern ad sales, the company says, but it's hard to believe the money connection won't have at least subtle consequences in other parts of the business.

Helping Pandora Thrive

Streaming music recommendation service Pandora is wildly popular but has been unsure about its own survival for some time because of the high licensing fees it has been forced by the music industry to pay. Last month the situation appeared to have been resolved, though not without controversy.

The new deal with Clear Channel will no doubt make it more likely that Pandora can survive and thrive. It will presumably also mean that there will be more ads in the music stream. The company's ad-free desktop music player does not appear to be selling well, though appearances could be deceiving. We've requested comment from Pandora and will update this post when we hear from them.

In the meantime, it's a situation that many music fans will have complicated feelings about. "It's a conundrum," prominent music industry blogger Dave Allen told us by phone this morning. "I'm a big believer in being able to access anything from the cloud, but it still seems early days. Clear Channel, though, that's a tough one for indie music fans to swallow."

Update: Pandora founder Tim Westergren emailed us the following response:

The deal is with [Clear Channel subsidiary] Katz, not Clear Channel. It's really most akin to an ad network deal (think DoubleClick for audio). It has no bearing on a relationship with Clear Channel (just as using DoubleClick has no implications for a relationship with Google), and will have no impact on our longstanding audio ad strategy - which will continue to be short, tasteful and infrequent. It just allows us to take advantage of an established network of sales folks as we ramp our team to keep up with the growth.

We'll leave it to readers to decide whether they buy that.

Update: A PR representative from Clear Channel emailed the following response to this post as well.

With regards to the situation in Minot, the public-notification failures connected with the Minot train derailment were a direct result of the local authorities' failure to install their Emergency Alert System equipment. Instead of using the equipment - which would have allowed authorities to automatically break into the broadcast - as specified by the Emergency Alert System and as successfully done locally by the National Weather service MANY times - the local authorities attempted to use phone lines that were jammed with citizens. That is why the government abandoned the phone-based emergency "broadcast" system seven (7) years before the Minot incident happened. When the truth finally came to light, the local authorities privately apologized to local Clear Channel managers for lying to the media and Congress about the incident -- a subsequent Congressional inquiry confirmed that local authorities were at fault that night and that Clear Channel Radio employees went above and beyond their professional responsibilities in responding to this serious situation, during and after the incident occurred.

Additionally, Clear Channel does not ban songs - and the company has third-party spins data to prove it. There is no truth to that rumor - there was no list issued by the company after 9/11. An email from a local programmer who had just lost his son was sent to a couple of his colleagues who were programming similar formats describing his personal experience with his overwhelming grief. It was not an official list distributed by the company - in no way, shape or form.

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.

As the New York Times reports, John Simson, the executive director of SoundExchange, still argues that the original rates would have been "appropriate and fair," but he admits that these new rates will give "webcasters the opportunity to flesh out various business models and the creators of music the opportunity to share in the success their recordings generate."

Tim Westgren, Pandora's founder, points out that this is not an ideal solution, but that this deal "still represents a thoughtful and reasoned outcome under the circumstances."

Some Changes for Pandora

At least for Pandora, however, this will also mean that a small number of users who stream more than 40 hours of music per month will have to pay 0.99$ if they want to hear more music on Pandora during that month. Pandora says this will only affect about 10% of its user base and those users, of course, could also upgrade to Pandora's desktop player, Pandora One.

After years of work and more than $20 million dollars invested, the company is finally looking at the light of the end of the tunnel: Turning a profit. In this exclusive interview with founder Tim Westergren after a town hall meetup in Richmond, Virginia, we discuss the company's close call with bankruptcy in 2007, their ad-based revenue model, their roadmap for adding new features and an open API, and their incorporation into a variety of hardware devices.

Now, however, the "unwitting nonprofit" is closer than ever to growing revenues larger than their expenses, news the investors will surely be ecstatic to hear.

In addition to recording this one-on-one talk with Westergren, we also captured about 20 uncut minutes of his talk to Richmond fans and users. Watch for the fuller story of Pandora's trials, triumphs, and evolution, including an extended discussion of the utterly unscalable but nevertheless fascinating Music Genome Project.

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.

Pandora: Humans Only

Pandora, one of the most popular music recommendation and discovery services on the Internet today, bases its recommendations on data from the Music Genome Project. The Music Genome Project assigns up to 400 attributes to every song. This, however, has to be done by trained musicians and the process can take up to half an hour per song. While the results of this method are often great, and we ourselves have often discovered interesting new music through Pandora, this approach simply doesn't scale very well and Pandora's library can often feel somewhat limited.

Mufin: Algorithms Only

Maybe the best known proponent of a music recommendations system that is purely based on algorithms is Mufin. Mufin's software analyzes the fundamental properties of a song and makes recommendations based solely on the musical similarity between songs.

While Mufin's approach generally works surprisingly well, the problem with this technique is that the system is simply oblivious to the cultural context of a song. Thanks to this approach, you might get to hear Christmas songs in February, for example, as the algorithms simply can't understand the cultural context of your music library.

At times, however, being agnostic to the cultural context of a song can also have its advantages, as Mufin's recommendations can often help you to rediscover music you had forgotten about. Mufin also works with any song, no matter whether it's from your own band, Kanye West, or an unsigned local band.

While Mufin's web service turned out to be a bit of a disappointment, we did like the company's iTunes plugin, which analyzes the songs in your library.

Lala: Explicit P2P Recommendations

Other services, like Lala, have decided to not feature any real recommendation technology at all. Instead, Lala purely relies on users following each other on the service and recommending new music to each other.

At least for Lala, this approach seems to work very well. When we talked to Lala's founder and CEO Bill Nguyen last week, he pointed out that 70% of all the music listened to on Lala was new music that was not already in a user's music locker, and that 18% of new music listened to on the service is bought and added to collections.

eMusic: Hybrid Approach

EMusic, the second largest online music store after iTunes, introduced a new recommendation system on its site late last year. This new system is based on technology from MediaUnbound, one of the larger providers of personalization and recommendation services. MediaUnbound, for example, provides the recommendations for MTV's Urge, Napster, and Brazil's Terra Sonora (eMusic, by the way, dropped Choicestream as its recommendation service in favor of MediaUnbound).

As MediaUnbound's CEO and co-founder Michael Papish explained to us last week, the company believes that a hybrid approach, which uses both algorithms and human input from experts, will provide the best results for users.

For eMusic, this means that the recommendations on the site are constantly fine-tuned by your own actions on the site, MediaUnbound's algorithms, and eMusic's editors, which, together with MediaUnbound's high-level teams, constantly evaluate the resulting sets of recommendations (Papish called this the "mosh pit" approach).

Genius: Apple's Black Box

It is hard to evaluate how Apple's Genius feature in iTunes really works, but Apple does have a few advantages. Because iTunes users often rate the songs in their library, Apple gets a lot of explicit information about a song's popularity. Users also regularly transmit information about how often they played and skipped a song to Apple's central servers.

Besides this, however, we can only speculate about what Apple looks at to give its recommendations. They surely evaluate playlists and the similarities between different users' libraries, for example. We can only assume that Apple uses a mashup of various recommendation techniques to come up with its own suggestions.

The results are generally quite good, though often either very predictable or completely random.

Opening the Black Box

In general, a black box approach similar to Apple's is still common for most recommendation services. Very few services give users a clear insight into why a certain song was recommended and the ability to fine-tune these selections (Pandora is a good example of a service that readily provides this kind of information). We are, however, seeing a trend towards users getting slightly more control over these recommendations. Slacker Radio, for example (see our review of their iPhone app here), lets users choose whether they want to hear more hits or more obscure artists on their radio stations. Mufin, too, gives users some control over how similar the recommended songs should be.

What Does Your Ideal Music Recommendation Engine Sound Like?

In general, we feel that every one of these approaches can provide us with relevant suggestions, depending on what kind of recommendation we are looking for. Of course, sometimes the easiest way to find great songs is to simply forget about the algorithms and editors and just look at what the people around you listen to on a service like imeem.

Do you have a favorite service for music recommendations? Or do you have some recommendations for these services that might help them to improve their service? Just let us know in the comments.

ReadWriteWeb Resources for Recommendation Technologies

We will be profiling other recommendation companies in upcoming posts. We also invite you to explore our custom ReadWriteWeb Resources:

• RWW Recommendation Industry Feed Favorites OPML file (save link)
• RWW Recommendation Industry Feeds - Best of Feed (copy and paste to your reader)
• Click to preview the above feeds before subscribing (pop-up window)
• RWW Recommendation Site Search (Visit and Bookmark)

CC-licensed logo image used courtesy of Flickr user shankar, shiv.

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.

We think it's CBS Radio and not Clear Channel which has made the biggest strides. CBS' partnerships with AOL and Yahoo!, along with its ownership of trendy online radio app last.fm, have effectively made CBS Radio the most powerful force in Internet radio in 2008.

Kevin Conroy, executive vice president of AOL, recently wrote in a guest blog post at Radio Business Report about the evolution of AOL Radio. Conroy wrote that the partnership with CBS Radio allowed AOL to tap into the "core competency in traditional radio" that CBS had. At the same time CBS got access to "AOL's substantial online listener base, and allowed it to connect with the AOL Network, which reaches more than 110 million unique visitors a month", wrote Conroy. He also noted that AOL got "an improved player, built by CBS Radio" that works on both PCs and Macs.

At the end of August we published data from comScore about the Internet Radio industry. It showed that the big Internet companies still dominate, specifically AOL Radio and Yahoo Music. At that point AOL Radio had been showing excellent annual growth, with a 56% increase over the past year. However Yahoo Music had decreased 19% annually since July 07. According to Reuters, in October comScore data had AOL at 3.99 million unique visitors, while CBS Web properties had 3.95 million unique visitors and Yahoo! Launchcast had 2.87 million. When you look at who powers both AOL and Yahoo now, it's clear that CBS has significantly increased its market presence since mid-08.

At ReadWriteWeb we've tended to focus on the innovative Web native apps that have risen independently of the big radio stations. According to comScore Pandora rose 89% from July 07 - July 08, while last.fm had 62% annual growth. But both the traditional radio broadcasting and Internet bigcos have been steadily increasing their influence - none moreso than CBS, which in addition to the AOL/Yahoo! partnerships this year also acquired last.fm in May 2007.

And then there's mobile. As Reuters pointed out, the iPhone has had a big influence on radio for mobile devices this year (see our post Top 5 Streaming Music Apps for the iPhone for examples). Other mobile devices, such as Blackberry and the Internet phones from Nokia, are also ramping up.

What other trends have you noticed in 2008 from Internet radio? What do you expect to see happen in 2009?

I'm covering the event for ReadWriteWeb, primarily looking at the overall impacts that policy developments and the economy are having on the music industry. But also how these forces may affect the underpinning structure of the industry and the artists who create the music. I'll be shooting video, too, interviewing speakers and conference participants. To kick off our coverage, here are five important online music biz people we plan to track down at the conference...

This startup depends on advertising revenue. With the recession underway, the revenue picture is unclear. Tim is here to discuss policy issues, one he is quite familiar with. Westergren became the defacto spokesperson in the long running battle in Congress over webcasting royalty rates.

Discussion point: What's the next hurdle for Pandora in the public policy debate about webcasting rates?

Josh Brooks, vice president of MySpace Music. The jury is out on the MySpace venture with the big labels. Last week, MySpace Music scrapped its equity deal with the labels. The labels had hoped for a big payday with that equity stake. They're now looking at an advertising share, which is a big question mark considering how much the market appears to be slowing. Josh is being pretty mum about how thing are going at MySpace Music.

Discussion point: Some have criticized that independent labels are being treated as second tier citizens by MySpace Music. Additionally, there had been some expectation that the indie artists would receive an equity stake much like the big labels were going to receive. What now?

Derek Slater, Google: Derek works in public policy at Google. Slater is formerly with the Berkman Center.

Discussion point: Google's public policy strategies and how it relates to the new platforms in development by music technology companies.

Gary Greenstein, Wilson Sonsini: Greenstein is a former attorney with the RIAA. He played a major role in establishing webcast rates when he worked with Sound Exchange.

Discussion point: How does Greenstein see licensing models changing and what are his views on the RIAA position concerning "making available."

Ethan Kaplan, Warner Bros Records: Ethan began his career in the music industry developing a fan web site for REM. The band hired Ethan to develop its web presence. Ethan is now vice president of technology at Warner Bros. Ethan is a huge advocate for open source. He has created a Drupal network for artists on the Warner labels.

Discussion point: What is the state of open source development in the music industry?

We have a few more people we plan to talk with here at the conference. We'll be back this afternoon. In the meantime, leave us your comments and perhaps questions for the 5 people listed above.

We'd like your help in predicting what the percentage of Microsoft's share of searches will be by December of 2008 following the integration of Live Search on Facebook. Will it increase or decrease and by how much? Click here to cast your prediction.

• The arrangement was first announced in July and offers a revenue opportunity for both companies
• Microsoft owns a stake in Facebook and has an exclusive agreement with the site for banner ads
• Results vary on Facebook and Live.com because Facebook uses certain filters for their search results

Predicting Pandora's New Royalty Rate

In the past few weeks, Pandora was at the forefront of many headlines. The CEO of Pandora fought hard to win a small victory that would grant Internet radio stations more time to reach a new royalty rate agreement with the powers that be. The cut-off time is February 15, 2009, which is right around the corner. We'd like you to predict whether a new royalty rate agreement will be reached in time and what the new royalty rate will be.

Fast Facts

• Senate approved a bill that says Congress must honor any royalty rate agreement reached
• Webcasters and copyright holders have until February 15th to come up with a deal on their own
• Current royalty rates would cost Pandora $18 million of its estimated $25 million in revenue in 2008

Mufin.com, however, which launched today, uses a fully automated system that only takes the actual sounds of a song into consideration. In our tests, Mufin often returned good results, but the fact that it doesn't take genres or the quality of a song into account can make for a frustrating experience at times.

Eclectic Recommendations

There is something to be said for this completely algorithmic approach. While social recommendation services tend to return results that safely stay within the same genre as the original song, Mufin's choices are far more eclectic. The most closely related song to Rick Astley's seminal "Never Gonna Give You Up," for example, is a song in Bavarian by a German folk pop group. Mufin really seems to like German songs, by the way, as more than half of the songs it recommended as similar to Frank Zappa's "Muffin Man" were from a Sesame Street album in German. In Mufin's defense, though, all these songs were quite similar in style to the original song.

Social Recommendations vs. Algorithms

As MG Siegler points out, the real advantage of social recommendation engines is that they are very good at filtering out bad music (though one might also argue that this can lead to slightly boring recommendations at times). Mufin neither cares about the quality of the music nor its popularity or language; it only looks at characteristics like tempo, instruments, sound density, and harmony.

Limitations

Mufin has already built an extensive library of songs, but it only holds the right to a limited set of them, which means that you simply can't play a lot of the recommended songs. Those songs that can be played are limited to 30-second previews , which can make it hard to decide if a song is really good and similar enough to warrant buying it.

If Mufin had partnered with a service like Rhapsody, for example, users would at least have been able to stream a limited number of full songs every month. Every song on Mufin features a link to iTunes and the Amazon music store.

Overall, we think Mufin is an interesting experiment, but we are not convinced that its algorithms return better recommendations than the more social approach of its competitors or the classification system of the Music Genome Project that drives Pandora's recommendation engine.

In this post we explore last.fm's feature set, how it compares to MySpace Music, and what we can expect to see from last.fm in the near future. Richard Jones also discusses how last.fm has managed to avoid the legal difficulties that have plagued Pandora.

RJ: Well, we liked the Last.fm/YouTube mashup Tim Bormans made so much that we hired him! Internally we've been working on multi-tag search which is available at our Playground, which allows you to search for music using multiple genres (folk + rock + gabba, etc); also on Playground we've been tweaking our Musical Soulmates app, which you could possibly consider the prototype for a future Last.fm dating service ;)

And of course, scrobbling continues to be an almost default setting for new music services now - from Hype Machine to Muxtape (RIP) to Blip.fm to the new version of VLC (which has 4 million downloads already since launch a couple of weeks ago), it seems like everything has to integrate scrobbling now. Great for us obviously, and great for our recommendations which will continue to improve as more people scrobble. People are scrobbling at a rate of 800 million times a month currently.

RWW: In terms of features, Pandora is similar to last.fm, in that both services have great recommendations and allow the user to discover new music. Both are streaming music services, yet it just seems to be Pandora - of all the 4 major services we've discussed so far - that has been having legislation issues. Can you clarify for our readers how last.fm has managed to avoid those sticky issues, when Pandora hasn't? I think many people are confused about that.

Last.fm is about more than just online radio. We've got millions of tracks available free-on-demand as well, and beyond that there's a massive social network element to the site. We also offer videos, the biggest events listings on the web (personalised to your taste), and our own audio and video content under the Last.fm/Presents banner. So the point is, online radio is only one of the things we do, so the legislation affects us only in one particular area of the Last.fm experience. As online radio is pretty much the single focus for Pandora, it understandably hits them harder.

The wider issue here, of course, is that royalty rates are high, and the debate around this needs to continue so we can reach a mutually beneficial and economically workable resolution. We don't want to see legitimate online broadcasters stifled by this - it's not good for music fans, artists or the wider music industry.

RWW: Lastly, one of the most interesting aspects of online music is its ability for new artists to be discovered. It's something MySpace has done well in the past, but we get the sense the perfect solution hasn't been found yet. As our own Marshall Kirkpatrick asked recently:

"How about a service that scans my iTunes library and my online listening history, determines my genres of interest and then never plays music from artists I've already listened to. Or makes sure to play some that I haven't."

Does last.fm have a feature like that coming up? ;-)

RJ: Do you think Myspace has done this well in the past? As you can tell from my reply to your first question [see Part 1], I would argue that Myspace has been a rather difficult site to navigate unless you're after popular stuff - and it's possibly going to be more of the same on Myspace Music, as the major labels jostle for frontpage real estate and push more indie/obscure music off the page.

Our recommendation system is being constantly refined to give music fans the best music discovery service on the web. I think we've got that covered. What's equally important is that these artists being discovered, if they're Long Tail or DIY, get the same kind of licensing and royalty breaks that more established artists get, which is why our Artist Royalty Program exists.

We've been doing this for 6 years, as I said, which is why it's kind of funny to be talking about this now because of Myspace Music. They're just catching up to free-on-demand after we pioneered the model almost a year ago. Now they've got to figure out how to make it easy to discover music that suits your taste (sharing playlists is one thing, but how do you find that music to share in the first place?), which we've been doing since 2002. After that, maybe they'll start paying unsigned artists. I would hope all this will come to Myspace Music at some point in the future - but it's happening on Last.fm now.

See also: Interview With Last.fm Founder Richard Jones: Part 1, The Competition and Part 2, Business Models

We started out by asking about the increasing competition in online music this year.

RJ: The space is crowded, I agree, and people now have a lot of choice if they want to listen to music for free. That's great for music fans - but what it means is that navigating through that mass of music is now the priority for them. It's all very well having millions of tracks at your disposal on Myspace or Imeem, but what's the use if you can't find what you want?

We have a unique recommendation system, drawing on the data of over 43 million individual songs, and the listening habits of 25 million music fans, enabling us to guide users through a 5 million + catalogue of freely streamable tracks and help them find stuff suited to their taste.

Recommendation and discovery is key in this space now - and we've been working on this for 6 years, and every day we continue to refine the process, so we're confident that we can continue to offer a better, more personalised music experience than anyone else online.

RWW: One of the things that's made Imeem a success this year - it's reportedly now the No. 1 streaming music site in the US - has been its licensing deal with all 4 of the major record labels, plus by their estimates around 80% of the indie music market. MySpace Music has 3 of the majors and has been criticized for its lack of attention to the independents. Can you clarify for our readers where last.fm sits in terms of licensing with the 4 majors and independents?

RJ: We have music from 3 of the majors, and renegotiations with Warner are ongoing. Our indie catalogue is equivalent to Imeem's - it includes millions of tracks from IODA, The Orchard, CD Baby and thousands of independent labels and artists - and we are currently in negotiations with Merlin. We continue to aim for the most comprehensive music catalogue online, and are making great progress towards that.

What's even more important, though, with regards to this point, is that we ensure all labels and artists are paid when their music is streamed on the site - and since the launch of our Artist Royalty Program, that means unsigned and DIY artists too. No one else is offering a share of revenue to unsigned musicians in this way.

RWW: You recently released a new version of the last.fm iphone app -- how crucial do you think mobile apps will be when competing against the likes of MySpace, Imeem and Pandora? Do you think you have any advantages over your rivals in this area?

We want the Last.fm experience to be accessible everywhere, so mobile is hugely important to us. At the moment the iPhone dominates, and our only competition there is really Pandora, which is limited to the US whereas our app is available in the US, UK, Canada, Germany, Spain and France, with more countries to come. Plus it's much more feature-rich and draws on a much larger music catalogue.

It's a cool app and I think it's the one that real passionate music fans choose because we really reach into the Long Tail in the music we play.

See also: Interview With Last.fm Founder Richard Jones: Part 2, Business Models and Part 3, Design & Features