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Pandora vs. Last.fm; good commentary. The Yahoo!/Google analogy ain't bad: Y!'s staff didn't stand a chance against, basically, the whole net; look at the dynamics: while the web was growing, Y!'s directory progressively got worse (less and less coverage), Google, however, progressively got better (insert lame wisdom of the crowd reference here; anyway: the crowdier, the better). Likewise, Pandora works quite well for mainstreamish music, but for the Very Long Tail of Music that's just beginning to come (thanks to omnipresent means of production [if not omnipresent talent]), the model collapses.
Find a way to ask the network (like Google did with PageRank and Last.fm, albeit on a much lesser scale, does with its plug-ins), and you've hit on gold.
Why are those services so important? Because, in the* future, nobody is going to listen to good ol' terrestrial radio any more (except in cases of emergency). Couple a service like Last.fm with UMTS and you've got something rather interesting. What today is a [mega]niche service will be ubiquitous tomorrow.
* Appropriately far-out.
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