Last.fm was named with the belief that its founders could create a music stream personalised to each listener so that there would be no need for anyone to struggle to find the niche station that just about met their needs.

Meanwhile, with GCap Media – the company behind Capital 95.8 and Classic FM – reporting a 9 per cent decline in advertising revenues and the broadcaster also dropping DJs during the daytime on Xfm, it is easy to conclude that there is an unstoppable shift away from radio stations to the computer-generated playlist.

Although it is true that radio advertising is suffering while the internet is gaining and that Last.fm has found a niche, the website is not yet killing the radio star.

There was also little detail circulating as to Last.fm’s financials yesterday. The $280 million purchase price is less than the $450 million once rumoured and what little company accounts that are available suggest a modest loss of £56,000 in 2005. Even despite its troubles, GCap Media earned £14.4 million before noncash charges last year.

Last.fm, though, is hardly short of possibilities. The website has 20 million regular users and it has a real opportunity to generate revenue and win listeners.

The problem for commercial radio, in Britain at least, is that it is caught between a weak advertising market and a BBC that is able to out-invest it. That is a tough prognosis for GCap Media, but it is not necessarily a route to success for Last.fm, either. It has to find enough listeners to repay its new owner’s faith at a time when the competition is becoming more intense.

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