Since Last.fm's label deals allowed them to stream over five million full tracks for free, the site has seen its CD and MP3 Amazon referrals increase 119 percent. Some of the effect is due to an increase in overall traffic since the full songs showed up, but existing users of the site purchased 66 percent more music during the same period. Last.fm's conclusion that free music on its site has led to increased sales appears to be valid.
Critics within the music industry who see free streams as potential replacements for purchases might find cause for solace in these numbers, which indicate that the more people hear, the more they want to buy. However, since CBS/Last.fm didn't announce overall numbers (just the percentage increases), it's tough to say whether this could eventually have a significant effect on overall music sales.
"In just over two months it's become clear thatpeople will buy CDs and downloads if they get access to the kind ofservice we offer," said Martin Stiksel, a co-founder of Last.fm who almost certainly became a millionaire several times over after his site was acquired by CBS. "No one else can give music fans this amount of musicfor free – but more importantly also drive their discovery, as wedo through our unique recommendation engine," adding that "minutes spent on site are up 118% month-on-month."
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