On the eve of its launch, courtesy of Frukt Music, comes an analysis of the strengths and weaknesses of the iPhone:

Strengths:

- Apple approach: a)great product, b)simple usability, c) clear communication

- Dual-contact touch screen, twice the resolution of average computer screen, full-detail web pages with easy zoom-in feature, easy-view photo software, extra Google maps functionality (traffic details, fake GPS), easy music/phonecall switchover via headphone button, integrated email, phone and web features and other technological advancements will appeal to early adopter Apple fans

- Relies on tried-and-tested iTunes software – already a hit with consumers

- Easy to activate iPhone at home using iTunes

- YouTube link-up allows users to view videos over WiFi

Weaknesses:

- Apparently no way to record video – so no instant uploads to YouTube

- Sealed-in battery. Must send it back to Apple for a replacement.

- No memory card slot

- Over-the-air content delivery not part of initial iPhone plan (although not a critical concern: for every iPod bought, only 20 tracks on average are iTunes purchased, most are transferred from CD or illegally downloaded)

- Strength/Weakness: High price point ($499/$599 at launch) will only attract early adopters (J.D. Power: Typical U.S. phone user in 2006 paid $94 for a mobile). Although, for the initial model, perhaps early adopters are the sole target market (modest Apple sales targets of 10M globally by 2008, less than 1% of the mobile handset market)

As hinted at back in February, Last.fm has been trawling around looking for a buyer and today it found its harbour in the form of a US media giant. The 'social music' site has been bought by CBS Corporation for $280m (£140m). This is less than the earlier rumour, but still the largest-ever buyout of a UK-based "Web 2.0" site.

The site was founded in the UK five years ago (you may have heard the stories about the founders sleeping on the office roof in a tent when they couldn't afford accommodation). It now has more than 15 million active users. Users basically connect with other listeners with similar music tastes, build their own personal radio stations and watch music video-clips.

Although the announcement today says that Last.fm's managing team (founders Felix Miller, Martin Stiksel and Richard Jones) will stay and the site will maintain its own separate identity, I can't see this staying this way forever, now that it's part of CBS, which will probably ditch the European sensibility of the service.

Stiksel reportedly said: "This move will really support us to get every track ever recorded and every music video ever made onto Last.fm." He also says LastFM will "put the users in charge. CBS gets this." Time will tell, time will tell.

Meanwhile for the less cynical among you, here is co-founder Richard Jones on the company blog today:

"The team here have spent a lot of time this year discussing what the future should hold for Last.fm, and while contemplating raising some additional venture capital we were approached by CBS. As you can imagine, we have been approached numerous times in the past few years from all the usual suspects regarding acquisitions and so on; CBS are one of the few companies who needed no explanation of what we are doing, and we were impressed at how progressive their plans are. This deal with CBS gives us a chance to really make Last.fm shine, and gives us more flexibility than other funding options would for doing all the crazy stuff we’re had scribbled on whiteboards for years."

So why did CBS buy it? CBS radio is the largest radio group in the United States, with 179 stations in the top 50 markets, but traditional media growth is stagnating and all the action - as everyone knows, especially when it comes to music and the youth market - is all online. The purchase thus adds to an advertising portfolio that already includes conventional radio, broadcast and cable TV and outdoor services.

CBS now has a strategy of reaching as big an audience as possible, not on creating content. It sounds like they plan to rely more on the users and viewers themselves to do that. In fact, CBS CEO Leslie Moonves says Last.fm's community play us "central to CBS". In truth CBS is coming late to the now established idea that music is a natural community builder and therefore a very 'sticky' eyeball attractor. As an anonymous CBS executive has already said: "We see it as a chance to get new eyeballs — or in this case earlobes."

As for the price, it looks easily affordable by US standards. Consider some earlier deals: News Corp bought MySpace for $580m (£290m) in 2005. Google paid $165bn (£82bn) YouTube in 2006. But according to the LA Times, the final price for closely held Last.fm could rise substantially if performance targets are met. Last.fm got its first round of funding last May from Index Ventures.

There may be a problem for LastFM in that in the US the recent ruling by the Copyright Royalty Board massively increases the royalties Internet broadcasters have to pay for streaming digital songs. This has already hit Pandora's plans to expand outside the US.

However advertising may offer more hope. Although LastFM recommends music for purchase, sales are not in fact a big revenue earner. Instead CBS will probably create sponsored channels, garnering bigger corporate deals with its existing sales contacts.

Expect also CBS radio stattions to start to appear on LastFM. Country AND Western anyone?

If the rumour that T-Mobile is in the front line to take the iPhone in Europe then the new rumour that the Apple iPhone will also be available on a pre-paid contract is pretty interesting. The Boygeniusreport.com says they got a few screen shots sent to them which show internal AT&T account codes showing the iPhone available to Pay As You Go subscribers with AT&T in the US. This would widen the market for the iPhone considerably, especially in the US where customers are generally locked into contracts for a long time. If the iPhone is pre-paid in Europe then expect a massive run on the phones - and yet more power to the iTunes music store.

The online personalised music streaming service Pandora has signed a deal with US carrier Sprint to be pre-installed or downloaded to handsets. Pandora and other web broadcasters have been heavily hit by recent increases in the licensing fees for web broadcasters in the US. Pandora has also had to stop streaming outside the US. The new Sprint venture means a badly needed extra revenue stream on top of advertising. Pandora says it has 6.9 million registered listeners. Pandora founder Tim Westergren says if the new royalty scheme stays then the business no longer makes sense.

Update: TechCrunch has news that Pandora will release a mobile device powered by Zing.

T-Mobile is partnering with ARTISTdirect.com, an independent music site, to improve its music and video download offering to mobiles and allows users to access content from live music events and gigs. Customers will be able to download music, videos and photos from acts featured in the site’s Street Gigs series. T-Mobile will also offer gig listings, ticket sales, news, exclusive interviews and backstage footage. The ARTISTdirect network has 40 million unique visitors worldwide, with four million of them coming from the UK.

Whatever happened to Angel Gambino, she of "MTV 2.0"? Well she's been hired by Bebo to a new position of VP-music. Bebo is interested in rivaling MySpace in the music stakes. Until January this year she was VP commercial, strategy and digital media for Viacom in the UK, where she worked across 11 channels, and was previously controller of business development and emerging platforms at the BBC. Gambino announced the move on her blog. Bebo claims to have 450,000 musicians already and last month partnered with online music retailer 7digital to allow independent artists to sell their tracks.

It's now obvious that in order to promote a band these days you have to play online. MySpace was a 'go-to' place for a long time, although it is fast losing its cache as record companies start to - ethically or unethically - virally seed their own acts, sometimes even using robots to add hundreds of friends to an artist's site or just employing people specifically for this task. And while the likes of Lilly Allen and Sandi Thom have managed to shoe-horn their MySpace exposure into a real-world record contract, the likes of Imogen Heap has some 330,000 'friends' signed up to her myspace - a fact which still didn't get her into the charts.

Instead, some bands are starting to bypass the whole record industry infrastructure (MySpace included), with some evidence of success. Koopa, a punk band, recently made it into the UK top 20 charts based on their sales via IndieStore.com - which is now hooked-up to the official chart system.

Indiestore enables artists to build their own download store, earn cash from the sales of their tracks and secure a chart position in official charts in the UK, US and 20 other countries. In addition, artists can promote their gigs and stay in touch with their fans on their own indiestore. Bands receive 80 per cent of money from sales.

The UK-based Bandwagon, too, has the advantage that people can download a single from the site and it will be chart eligible.

Now Bandwagon has launched a Millionpoundjukebox.com. This plays a jukebox of a random track from Bandwagon bands, and displays pixels which you can buy to advertise on the page (via paypal).

So the deal is: over a 12 week period, 120 bands will be streamed through the jukebox; 10 tracks from different artists will be playlisted and streamed each week; an industry led A&R panel will chose 20 winners at the end of the period; each winner will receive £25,000 for development (music videos, publicity). (My favourite so far is Lucky Soul, but then I always like music which sounded like The Cardigans!)

You can get a feel for how these sites are doing from Alexaholic. There, you'll see IndieStore has had the most traction so far. However, it's worth reminding you that page traffic figures on e-commerce sites have never been that useful a measure.

Meanwhile, the opportunities to sell or push your own music online have never been bigger. Just check out Soundclick, CDbaby and Garageband to get a flavour. Soundclick, which offers free music, is the biggest of these obviously. Here's a traffic comparison.

Global digital music sales almost doubled in 2006 to around $2 billion, or 10 percent of all sales, but have not reached the industry's "holy grail" of offsetting the fall in CD sales, says the International Federation of the Phonographic Industry. Reuters reports that expected digital sales to account for a quarter of all sales worldwide by 2010.

It looks like Koopa - a punk trio which a mate of mine has been involved with - have now proved that real punk (the kind that really does screw the establishment) is not dead. From Reuters:

Reaction is coming in on the Myspace decision to sell non-DRM MP3s from unsigned bands registered on the site.

The Register: "We reckon it's the record companies that should be more woried about MySpace than Apple at the moment, though. If so-called "MySpace phenomena" such as the Arctic Monkeys and Lily Allen continue to emerge through self-promotion and are given unprecedented direct selling access to their MySpace-addicted audience, where do the big guys fit in exactly?"

The New York Times: "... for the four major labels, which must approve each retailer that sells digital versions of their music, the new store could represent a challenge. The MySpace store would let labels set their own prices for songs, which they have complained that iTunes does not let them do. And all of the major labels have put their catalogs into Snocap’s database, which uses an audio fingerprinting technology to prevent people from selling songs they do not own. The MySpace store will sell music in the MP3 format, however, which allows them to be played on the Apple iPod but does not offer any copy protection... For each track it sells, MySpace will charge a band or label a fixed fee of around 45 cents, which it will share with Snocap."

Business Week: "Unlike iTunes, where all tracks are 99 cents, musicians set their own prices. MySpace and Snocap say they will take a cut just large enough to cover the costs of the materials and provide a tiny profit; the lion's share of the sale goes directly to the artists. That's a sweet deal for independent bands like The Format, a Phoenix pop band that participated in a test of the storefront. The band has listed 12 songs for sale at 79 cents each. Already, lead singer Nate Ruess says he has received loads of e-mail from fans saying they appreciate that they can get the music directly online. "We got burned by our old label, and you realize you don't need these things when you have something like Snocap," Ruess says."

Technorati Tags: Musicbites

MySpace is to sell songs from nearly 3 million unsigned bands, reports Reuters. Thats'non-DRM'd MP3s, by the way. The bands will be able to set the price for each track, with MySpace and tech partner Snocap taking a cut of the sale, reports Wired. However, the move probably won't affect Apple, as CNN and MySpace itself seems to think. As tbites points out - guess what - MP3s can be loaded onto the the iPod and iTunes software. Apple will make far more out of the hardware sales. Kerching!

Technorati Tags: Musicbites

Spiral Frog will make us watch adverts before downloading the music track to one PC and two portable devices, while remembering to log in at least once a month, in order to retain access to the music we've already watched adverts in exchange for. MusicBites thinks this sounds a bit like all those dumb businesses during the late 90s which tried to play 15 second to 30 second adverts at callers in exchange for free or cheaper calls. Do ANY of those companies still exist? No. Will you really want to watch an ad EVERY TIME you want to download a track? No. I predict the sacking of a number of Universal executives and a relaunch in under a year.

Technorati Tags: Musicbites, Spiralfrog

The mbites.com podcast this week looked at how digital music is impacting both on music fans and the artists themselves. The guests (pictured) were Laura Lee Davies, former editor of Time Out magazine in London and a music journalist of 20 years experience, and Ben Drury, founder and managing director of 7digital.com, which provides digital downloading services to many leading brands and artists' web sites.

Coldplay#039s X&Y album has problems with DRM. In that is has a LOT of DRM. Mac User has the story.

MusicBites put together a panel of experts of its end of year review of the digital music business, the recording of which can be downloaded here (Note: 49MB file).

The panel discussed some of the big moves made this year by the likes of Apple, the major record labels and most recently Microsoft. And we looked to the year ahead - making a few predictions along the way...