There is quite a controversy building around whether CBS-owned Last.fm is an eventual replacement for terrestrial radio.

The Motley Fool investors publication says Last.fm could mean the end of radio.

Kurt Hanson, who I respect more on these issues, says wait one minute -- Last.fm isn't even radio.

It's an interesting prospect either way. To bring you up to date the four major record labels have cut a deal with Last.fm to get a penny or so for every time a young consumer goes to Last.fm and requests a song. Hanson points out, "Going to a website and saying “I would like to hear ‘You Know I’m No Good’ by Amy Winehouse right now and then being played that song is not “radio” by any stretch of the definition that I’ve ever heard."

The Motley Fool is enamored at the prospect of free online streaming of music from the major labels and a host of indies.

One problem.

Young people have voted again and again in this race that they want to own their music not rent it or listen through a glorified subscription or ad-supported service.

The labels -- a group that would cause me to do the opposite of what they do -- is simultaneously selling music to cellphone companies so their customers can have a phone full of music included with the price of the phone. That's a loser with young people.

Last.fm -- now with the ability to play what you say instead of what terrestrial stations like "Jack" want to play -- is also a non-starter.

These ideas and concepts are the creative result of older and in some cases out of touch people who do not understand the young consumer. These products are what they think young people should listen to vis-a-vis their dying record businesses. They are not, however, what young people want. In the months ahead, the painful truth will become evident even to them.

Here's what the entrance and exits polls -- so to speak -- are telling us about the next generation, the record business and new forms of listening:

1. They want to own their music (I use the term own loosely to include paid and stolen music). Rental services like Napster and Rhapsody have not resonated. The labels want young consumers to rent. Cell phone companies can't see why adding a few extra bucks to the monthly bill for all the music in the world won't be a winner. I'll give you two reasons: one is the iPod -- the choice of the next generation and it isn't going away any time soon. And, two, the next generation can steal music without a problem. Who needs rental?

2. Young listeners don't like radio because they have alternatives, but radio has sucked since the 80's -- at least that's when the term "radio sucks" emerged. No one says, "iPods suck" -- at least not yet. But young people show signs of iPod fatigue. Properly read, this means they are not giving up their iPods, they'd just like to be entertained every once in a while.

3. Internet radio will be the smash hit we all think it can be once it can be received everywhere on every device. It's beginning to happen now, but most people don't listen to Internet radio on the go. And by Internet radio I don't mean terrestrial radio "lite" or another version of an HD subchannel. I mean real entertainment. Internet radio is the killer app.

4. Keep an eye out for some form of mash-up music sharing. We're seeing this in video where users can take pictures and send them along to a friend to add music or whatever. Control freaks like record and radio execs will do just about anything but enable a generation to fool with their artists rights. Admirable? Not when their customers do it anyway.

5. Young consumers have iPods -- they have hard drives loaded with music bought and stolen. They also want to be entertained. Instead the labels and their cohorts keep trying to invent the next thing but this generation is going to tell you what the next thing is. And what is it? Entertainment. They want to be entertained. They want to participate in the entertainment. If I'm in radio reading this I am jumping for joy -- that's a core radio skill -- but it will have to be transfered to where the next generation lives and it's not on the radio band.

6. Radio (whether Last.fm or terrestrial) cannot compete with an iPod for playing favorite music. An iPod is a storage device that plays back music. Radio entertains -- or should. Subscription services or ad driven services like Last.fm will be more popular with record labels than with young consumers.

The Motley Fool says:

“Last.fm, bought by CBS… is providing on-demand delivery of its growing digital library for free...Naturally, this is also bad news for other companies selling digital tracks, like Apple, or music subscription services like Napster and RealNetworks".

I disagree.

Terrestrial radio doesn't have to worry about what Last.fm is doing.

It needs to worry about what radio isn't doing.

If radio broadcasters want a prominent piece of the future, they are going to have to provide entertainment content for the next generation where they live -- on the Internet and through portable, mobile devices -- not over the airwaves.

The one thing terrestrial radio has going for it is that it is free.

Free works just fine with this generation, but if there is a lesson the labels, Last.fm and everyone else will soon learn it is that iPods are storage devices and that young people prefer to own their music.

That radio is about entertainment and in the future radio will be Internet-based, readily delivered on mobile devices and has some component of social networking or interactivity built in.

Last.fm is Lost.fm if they try to make it the newest version of a "free music" service that masquerades as an iPod.

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