Lala's business model of selling and hosting digital music was a complete abhorrence to an innovative music startup -- named Lala. When the site launched, it was a CD trading service that held up the integrity of the album and the virtues of physical content ownership in an online music market of single-track downloads and subscription-based music rentals. To its trade-by-mail CD service, Lala added CD sales, playlist creation, and for a short time even owned a former broadcast radio station. It had to ultimately scale back, though, on what would have been its most audacious move, giving away full streaming of the major labels' catalog -- all in the name of driving song purchases.
Lala's shifting strategies through the years may have led many to think that its recent acquisition by Apple would represent radical changes to Apple's music approach. Lala lives on a Web page, streams from the cloud, and gives users, including Google search users, one full free play of any song in its library. But Lala's business model was always, at its core, more like iTunes' than any number of streaming music companies -- from the custom radio of Pandora to the subscription downloads of Rhapsody. Those services, however, have long been better at Apple at fostering music exploration when compared with iTunes' 30-second samples.
While it reversed its emphasis on physical albums versus digital singles, Lala always believed in conferring permanent ownership of music just as iTunes does. Even its idea of a websong, the 10-cent single that can only be streamed from its site, was intended to be permanent digital property, and in fact could be "upgraded" to a downloadable digital music file for the difference in price.
Lala could eventually have a strong impact on how iTunes customers discover and store music, Those familiar with Lala's history know that the company already allowed consumers with large music libraries to access to their songs from the Lala site without having to upload many of them. That would certainly be a complementary feature to add to MobileMe. And of course there was Lala's long-discussed iPhone app, designed for offering any songs consumers had stored on its service, as well as full samples of Lala's library songs over wireless connections.
But, again, this was all in the name of driving transactions, not streams. In
Lala offers Apple a ready-made, Web-based consolidation of personal libraries and sampled music.
As Apple steps up flirtation with the cloud, though, the question, though, is whether is whether single track sales will even last for decades more. Recently, mog.com relaunched as an all-streaming service for $5 per month, a price that was used by Yahoo! Music and Napster to drive sampling. Napster even enabled limited free downloads at that price. But Mog may be the most pure Web-based music acccess company yet. Like Lala, it enables you to save songs in an online library, but doesn't even sell its own music, instead acting as an affiliate to Amazon.com.
And those kind of affiliate relationships may indeed help explain why Lala would up as part of Apple. With the PC manufacturer having such a strong presence in the smartphone market, Lala would have had to sell through iTunes on its iPhone app. Lala's technology can do a better job of leading consumers to the store, but Apple will continue to ring up the majority of the sales.
Ross Rubin is director of industry analysis for consumer technology at market research and analysis firm The NPD Group. Views expressed in Switched On are his own.