As much as I have loved last.fm, they really dropped the ball this morning.  While still unparalleled in term of tracking your listening habits, last.fm seems to have lost the “streaming radio” battle to Pandora.

This is the email I received a few minutes ago

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Last.fm
Dear cdoelle,

We want to share with you an important update about our radio service:

From February 15 you will need to be a subscriber to listen to Last.fm Radio stations on devices, including your Last.fm iPhone / iPod Touch app.

No other features are affected by this change.

In taking this decision, we have given a lot of thought to how this impacts some of our early adopters and long-time users like you. We truly appreciate what you have meant to our growth and success, and offer you the following as a token of our thanks;

A free 3 month subscription to Last.fm

This will start automatically on February 15th 2011. As a result you will continue to be able to use Last.fm as you do today until the end of your subscription.  If you’d like to see the other benefits of your free subscription, please visit the subscription page.

We appreciate you may have questions about this announcement, so visit our blog to read more about these changes and offer feedback.

We value your support and hope you continue to enjoy using Last.fm.
You can visit your profile at http://www.last.fm/user/cdoelle

– Team Last.fm

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Again, I LOVE last.fm and was even in favor of their streaming capabilities just because of its tracking.  This is despite the fact that it load slower than Pandora, skips and drops more frequently and doesn’t pick up where you paused the song (Pandora will do so even days after you paused.)

And the end of the day, they lost sight of the most important thing about internet services – FREE.  Yeah,  if I was going to pay 3 bucks a month to listen to streaming radio, it would be for Pandora.  Plus, as long as there is a free option, neither of them will get my money.

Maybe last.fm can just learn a lesson (ala New Coke) and rush back in to fix things?  Until then, I will be working on how I can get the Pandora iPhone app to report my plays to last.fm.