The RIAA and Last.fm were busy denying a rumor over the weekend that alleged that the personalized Internet radio firm provided the music industry trade group with data on the listening habits of users who were streaming leaked music from U2's upcoming "No Line On The Horizon." Both vehemently denied the allegation, which was reported by technology blog TechCrunch, but there are lessons to be learned here, in what precipitated the story and the subsequent reaction.
The initial outrage basically stemmed from a prevailing feeling held by many Web users: You can't trust the RIAA. That belief gained momentum over the past five years from the PR disaster caused by the trade group's lawsuits against individual file sharers. And, as a result, digital services that share data with the RIAA are more closely watched.
The allegation highlights the extreme sensitivity in sharing usage data with the music industry at a time when record labels are increasingly hungry for more. The collection and analysis of user data - traffic metrics, not personal info - is shaping up to be a major factor in the future realignment of the business as niche marketing become more important in the digital age. The data can be a very powerful tool to inform marketing and promotional activities, but it can also quickly devolve into spam. And there's a fine line between gathering information and invading privacy.
The report underscores the impact of journalism in today's online world and how reports can quickly affect a company. The online news cycle is a beast that needs constant feeding. Competition for pageviews is fierce and too often snark surpasses sense and traffic trumps truth. But, the bottom line is there are real world business ramifications to contend with. Last.fm had to woo back users who deleted their accounts at the initial news, following a rapid and loud denunciation of the original story, by promising users their playlists would still be available if they rejoined.