Last week's Switched On discussed Lala.com's introduction of free music locker services that sync directly to the iPod (and only the iPod). However, because it believes the sampling capabilities of the original Napster days were key to driving music purchases, Lala is also developing something that is bound to shake up subscription music services such as Napster and Rhapsody -- free and unlimited streaming of user-selected music from major labels.
Once agreements are secured, Lala will essentially be giving away the rough equivalent of Yahoo Music's Unlimited's $5/month PC streaming service.. While Lala's version will have some offline functionality with cached tracks, it doesn''t yet offer tethered or a la carte downloads the way that Yahoo! Music and other PlaysForSure services do.
At its preview launch, Lala will offer access to the complete Warner Music library -- hundreds of thousands of tracks -- and is pursuing agreements with the other major labels, as well as independents. It expects to pay approximately $140 million on licenses in the next few years to spur huge increases in music sales via viral and social network marketing; something that Napster.com's limited free listens were unable to do.
In going to such expensive lengths to spread music awareness, Lala is making a huge leap of faith across generation gaps. The original Napster was embraced by young adults but Lala is targeting older adults that are more active music buyers. Furthermore, some percentage of these music consumers will likely prefer to have unlimited, albeit rented, downloads to their iPod competitor included with their monthly subscription.
The missing piece is getting digital tracks and albums purchased from Lala onto the iPod. For now, the company is still offering only CDs for sale, but plans to roll out features that would include, for example, the ability to download purchased tracks directly to an iPod, mix playlists created in iTunes with tracks from Lala-sampled albums, or WOXY stations. After creating such a playlist containing tracks you own and those you don't, you would be prompted you to buy those that haven't been purchased as you sync back to the iPod.
While other online music sites threaten to shutter in the face of rising Internet radio royalty rates, Lala is growing what may be the biggest legal carrot ever put before music fans. When I asked the company why it didn't offer some kind of stick, such as a requirement to buy one CD a month, Lala responds that they actually want freeloaders on the site, as these are typically the taste makers who drive purchases of others. In the battle between a la carte downloads and subscriptions, Lala's new offering should prove highly attractive to music lovers frustrated by the samples of other services. The $140 million question is how many of those samplers will Lala be able to convert.
Even if consumers don't say, "Rah! Rah!" to Lala and shell out the moolah, the company says its funding allows it to offer the service for a few years. In the drunken turn of events that has been online music , this round is on Lala.
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.