When Lala.com launched just last year, the company raised eyebrows looking to build a business around trading of compact discs for a dollar per trade while expecting most of its revenue to come from sales of new CDs. The company claims that it actually reached profitability in its core business, but it realized that exposing members to lists of each others' CDs wasn't enough. Soon it added Internet radio by acquiring terrestrial-turned-Internet broadcaster WOXY.com.
Lala has dismissed concerns that it would facilitate piracy as members ripped and flipped with the argument that the real problem that music faces today is the war for time and money versus other media. Consumers are inundated with cable channels, YouTube, RSS, DVDs, video games, Web sites and those clever Engadget columns that you know you should really submit to Digg more often.
To this war, Lala is bringing two major weapons which brings the site determined to disrupt squarely into the realm of digital music. Not only will the company offer free music library hosting and downloading directly to one's iPod, but it is moving to offer free streaming of on-demand libraries from all four major labels, starting with Warner Music.
Lala will enable any members to store their entire digital music collection on its site to stream on demand. Of course, Lala is not the first to have this idea -- MP3.com tried it in 1998 and earned the scorn of the RIAA, which forced the startup to nix the idea. Nowadays, several sites provide music locker services (often for a fee) for those wiling to upload their music files, which can be a lengthy proposition for those with large libraries.
However, Lala is getting around that upload requirement with lucid reason, compelling arguments, and a big, fat check (but it probably was mostly the lucid reason). Because Lala has paid for the privilege, those using its locker service can often dispense with uploading their files. If it has rights to the song, Lala will populate your online music library for you, as in the MP3.com days. Unfortunately, though, it will take a while before the music industry's accepted means live up to the speed of the simple CD verification that MP3.com pioneered.
What if a file on your PC is encoded with FairPlay or Microsoft's DRM? In that case, Lala will substitute its version for the protected one if it has the rights. To the question of whether it will transcode protected songs not in its collection, Lala says that its license with the labels enables it to "future-proof" its music offerings.
Beyond streaming your library, Lala is enabling users of its locker service to download tracks directly onto their iPod using a Web page that, at least on its surface, resembles iTunes. Downloading also requires installing of a small program called LalaPlayer, available for Mac OS X and Windows. With it, you can go on a trip with an iPod nano and refresh it with new tunes from your library. Lala plans to offer a variety of bitrates for remote downloading, trading off download time for quality.
While there's no DRM on the tracks that Lala substitutes for those in your home library, these tracks are watermarked with your account information (as is apparently all the rage these days, QED iTunes Plus). In addition, while tracks I uploaded to Lala came back down in the same format and bitrate, those that Lala provided were described by iTunes as 64Kbps mono MP3 files (but clearly sounded better). Lala says that these tracks were using AAC, which iTunes may not be identifying correctly despite its support for that codec. iTunes and the iPod -- even a first-gen model -- were able to play the songs, but they should be represented accurately. Lala has an elaborate scheme for transferring licenses if its trusted members transfer songs to another user, but says that it will not police its users.
Lala's music library hosting stands to become a welcome alternative to paid locker services or free home streaming products such as the slick Avvenu Music. Next week's Switched On will discuss the broader implications of Lala's more ambitious direction -- free, on-demand streaming access to music from the major music labels.
Ross Rubin is director of industry analysis for consumer technology at market research and analysis firm The NPD Group,. His blog can be read at http://www.rossrubin.com/outofthebox. Views expressed in Switched On are his own.