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iTunes accounting for 1/4 of all U.S. music sales
Overall, music sales fell by more than a billion dollars last year, but Apple's iTunes is doing better than ever. The digital music distribution service claimed more money than ever, and now represents the biggest U.S. market for music sales, making up over a quarter of total music sales in this country. Unfortunately, not even iTunes may save the industry; total music sales in the US only rose by 1.1 percent over the previous year (which, according to industry analysts, is as good as not growing at all), and the total worldwide market decreased to $17 billion. That's nothing to sneeze at, but the fact is that, even if more people are buying music through iTunes, less music is being sold. The way the trends are going, it looks like actual music sales themselves may start dropping off, even in the United States. So what's the solution? The record industry is actually looking to iTunes now to save their own business. One executive is quoted as saying that an iTunes subscription service might be just the thing to get people interested in buying music again (or at least renting it). It would appear that, with the purchase of Lala, Apple may be laying the groundwork for a service like that. However, there are a lot of other factors going into this market change (not the least of which is that it's easier than ever to make, buy, sell, and share music outside of the record industry system, which includes iTunes), and even a subscription service won't solve the problem.
Why Apple might want to buy ARM
--- Last January, Apple COO Tim Cook stated, "We believe we need to own and control the primary technologies behind the products we make." That motivation, backed by Apple's 41 billion cash on hand, makes its rumored acquisition of ARM Holdings so compelling. --- What would you do if you had $41.7 billion in cash reserves? That's what Apple has and, as Ken posted earlier, the rumor du jour suggests the company might use a modestly large chunk of it to acquire ARM Holdings. If such a deal is in the works, it would be Apple's largest purchase ever by an order of magnitude; the suggested £5.2 billion (US$8 billion) sticker price dwarfs the biggest prior buyout, which brought NeXT into Apple for $400 million and delivered the foundations for Mac OS X (along with a certain iCEO). ARM licenses its chips to many consumer electronics heavyweights; in addition to powering the iPad and iPhone, ARM processors power other smartphones, including those running on the Symbian, Windows Mobile/Windows Phone 7, and yes, Android operating systems. An Apple acquisition of ARM, therefore, could have far-reaching implications on consumer electronics, especially when it comes to competitive access to the latest and greatest ARM chips. In the London Evening Standard article, a trader was quoted as saying "A deal would make a lot of sense for Apple .... That way, they could stop ARM's technology from ending up in everyone else's computers and gadgets." That may be taking it a bit far -- ARM's licensing and product lineup couldn't be made completely private in the short term -- but it would make Apple the most-favored customer for ARM's designs. It would also help Apple's other recent buyout, chip shop Intrinsity, make the most of its expertise. Back in January 2009, Apple COO Tim Cook stated, "We believe we need to own and control the primary technologies behind the products we make." As the processor plays a pivotal role in shaping the user experience on mobile devices (think performance and power consumption) an acquisition of ARM could provide Apple the ability to better integrate and leverage ARM technologies in order to stay ahead and differentiate from the competition. The A4 chip in the iPad is based on an ARM design, which was first whispered about almost two years ago. In the last two years, Apple has made several notable acquisitions: of semiconductor company P.A. Semi, mapping company Placebase, music streaming service Lala, and mobile ad firm Quattro Wireless. So far, the Quattro Wireless acquisition has produced the most visible results, in the form of iAds. If an ARM acquisition is indeed happening, it'll be fascinating to see what comes out of it.
Rumor: Cloud-based iTunes delayed until summer
Ever since Apple bought music-streaming service Lala, rumors of a cloud-based solution for iTunes have been floating around. And unfortunately, we don't have any official news on that yet (I know I'd use it -- I already share my library to all of my computers in-house anyway), but we do have more rumors. "Music industry sources" have informed CNET that there is a cloud service in the works, but that it's been delayed until the summer at least. There's no information about why, but apparently the delay came from Apple -- the company told music industry executives that the service wouldn't be ready until the third quarter of this year. I'll wait -- having an iTunes service that could send my music library to any computer I own (or even my iPhone or iPad -- drool) would be awesome, but of course there must be lots and lots of technical and bandwidth issues to work out at least. So if you are expecting to see a cloud-based service from Apple in the future, you can at least stop frantically refreshing the iTunes page until sometime this summer.
MOG bringing unlimited music streaming to iPhone and Android, Rhapsody taking iPhone music offline
While we all wait patiently for Apple to concoct its own subscription-based, unlimited music streaming service (hello, Lala acquisition!), MOG is jumping on the opportunity right away. Er, almost right away. Down in Austin this week, the company announced that an iPhone and Android app would be out "in early Q2" in order to bring unlimited music streaming to both operating systems for $10 per month. We're told that a catalog of seven million songs will be available, but there's no way to know if 6.99 million are of the "no one cares" variety. At any rate, your monthly fee will also allow unlimited streaming from the desktop, but alas, you'll be left with nothing but hollow memories should you ever stop ponying up. In related news, Rhapsody has announced (video after the break) that offline playback support is coming to the iPhone, with the updated app expected to be passed along for Apple's confirmation "shortly." Granted, the Rhapsody to Go subscription is $5 per month more than MOG's option, but with all this competition popping up, we wouldn't be shocked to see that slide lower in due time.
Steve Jobs at Apple Town Hall meeting: Harsh words for Google, Adobe
Steve Jobs recently held a Town Hall meeting for Apple employees, and according to Wired, he had some very choice words for both Google and Adobe. While these likely aren't direct, word-for-word quotes, as they come from employees who spoke to Wired and MacRumors on condition of anonymity, if they're even in the ballpark of what Jobs said, Apple's response to both Google and Adobe can be summed up in two words: "Bring it." On Google: "We did not enter the search business. They entered the phone business. Make no mistake: they want to kill the iPhone. We won't let them [...] This don't be evil mantra? It's bullshit." Snap. Maybe a tad belligerent there at the end, Mr. Jobs? I wonder what brought that on? On Adobe: "They are lazy. They have all this potential to do interesting things, but they just refuse to do it. They don't do anything with the approaches that Apple is taking, like Carbon. Apple does not support Flash because it is so buggy. Whenever a Mac crashes more often than not it's because of Flash. No one will be using Flash. The world is moving to HTML5." Sounds like the petitions can stop now. If that's really what Apple's CEO thinks of Flash, then make no mistake: Flash is never coming to Apple's mobile devices. Some other tasty tidbits from the Town Hall courtesy of the folks at MacRumors: - Jobs considers the iPad on a par with the iPhone and Mac as one of the most important products he's worked on - Apple acquired Lala because they wanted to bring Lala's people to the iTunes team - The next iPhone is "an A+ update" that Android won't be able to keep up with - New Macs this year will take Apple "to the next level" - Apple is still playing "wait and see" with regards to Blu-Ray, and won't implement it until/unless Blu-Ray sales take off
Apple rumor roundup: pipe dreams, Lala's role and Verizon's iPhone 4G
In case you haven't noticed, things are getting out of hand in the world of Apple rumors. Frankly, it's all we can do to read another one and trudge onward, but hey -- we've no problem with folks putting their reputations on the line here. Let's dig in to the latest pair, shall we? The rumor: Apple's acquisition of Lala will actually lead to customers having access to an "online locker" for multimedia. This could be a cloud storage location for one's iTunes library, enabling them to have access to their jams and vids even when away from their at-home storage. The trick is that the cloud would only hold the metadata, and streaming would originate from somewhere else on Apple's end. Our take: Okay, so we want to believe. Just imagine if your next Apple tablet or iPhone knew exactly what songs you owned in iTunes, and at a moment's notice, you could tap into the iTunes store and stream full, unedited versions of those songs from anywhere. Amazing, no? Problem is, the bulk of iTunes libraries aren't made up of content that was purchased in iTunes (or purchased at all). It seems that the best Apple could do would be to negotiate streaming deals for content you've actually purchased within iTunes, which results in a half-baked user experience. Last we checked, Stevie J wasn't much on half-baked user experiences. The rumor: Astoundingly, the mythical Apple tablet won't be the company's "one more thing" next week; instead, it'll be a refreshed iPhone... that works on Verizon Wireless. Oh, and iPhone OS 4.0. So says Canaccord Adams analyst Peter Misek, anyway. Our take: Ha! Apple has never been one to showcase too much at one time, and we're guessing that the outfit would be smart enough to withhold a new iPhone introduction for a separate press event. We don't doubt that a Verizon iPhone is in the works (though an LTE version will be at least a year or two out), but there's no way Jobs steals the tablet's thunder by giving every rabid iPhone user hot sweats when considering the switch to Big Red. Bottom line? Don't bank on it. At this point, we reckon everyone would be best served by taking a huge step back, a deep breath and one of those so-called "chill pills." Next Wednesday ain't so far away, now is it?
Rumor: Lala acquistion to create "online locker" for music
We've covered speculation about Apple's acquisition of music-streaming service Lala in the past. General consensus has been that Apple is looking to use the service in a future version of iTunes, allowing users to stream their own music libraries to their computers, iPhones, and iPod touches from a remote server, thus freeing up memory space on the devices themselves. Citing "a wide variety of insider sources," Michael Robertson, former CEO of mp3.com, claims that this speculation is correct. He says that instead of moving to a subscription-based model, Apple will indeed leverage the technology and resources of Lala to allow users to stream their music libraries from a remote server. It will be interesting to see if Robertson and other analysts' speculations are correct. There are certainly some technological hurdles to surmount in letting millions of iTunes users stream billions of songs – my own music library is nearly 40 GB, which is twice the default data allowance on MobileMe – but licensing issues seem to be even thornier. While Robertson says that "...because users are in possession of the materials no new licenses are required from the record labels or publishers," for streaming content, I'm going to go out on a limb and say that your friendly neighborhood RIAA will disagree. However, if Apple can indeed make this streaming service happen, it will be a huge win for them, and more importantly, for us users. [Via electronista]
Apple's Lala acquisition leads to 30-second song previews on the web
We have a sneaking suspicion that this wasn't the only reason Apple bought Lala, but it looks like the first fruits of the acquisition have now begun to show themselves in the form of 30-second song previews on the company's recently-launched, browser-based iTunes Charts. Not exactly a web-based version of the iTunes store, to be sure, but it's a start... sort of.
Apple adds 30-second samples to browser-based iTunes previews
Last November, Apple launched browser-based iTunes previews, which gave customers information on a song or artist before pushing them out to the iTunes Store. It's a handy, welcome change. And now this week, they've added 30-second song samples to those preview pages (check it out). Just as you do in the store, you can hear any track's sample by clicking the small "Play" button that appears when you mouse over its name. There has been speculation about the future of a streaming-based version of iTunes since Apple bought Lala in November. The Wall Street Journal recently reported that LaLa executives have been given key roles at Apple, and that members of the existing iTunes team will report to them. While playing with the new previews today, we explored the page's source for any hints of Lala, but found nothing. However, we did come across something interesting. Turns out you can easily turn any 30-second preview into an iPhone-compatible ringtone, and you don't even need GarageBand. First, find a snippet you're interested in. Then view the page's source. Scroll down until you see something that starts: audio-preview-url="http://a1.phobos.apple.com/us/r1000/016/Music/3a/7b/83/mzm.ekrigiqi.aac.p.m4a" Copy the URL (minus the quotes) and paste it into Safari's Downloads window. You'll get a file with a name similar to: "/mzm.ekrigiqi.aac.p.m4a" Now, replace ".aac.p.m4a" with ".m4r," drop it into iTunes and sync. You've got a new ringtone! Of course, you can't choose the 30 seconds you hear, and that use probably isn't intended by Apple. But if the preview happens to be what you want, there you go. [Via Mac Rumors]
Apple allows Google to use Lala
We're not sure how Apple plans to utilize its recent acquisition of Lala, but BusinessWeek reports today that Apple does plan to let Google keep utilizing the service. Google unveiled its own music search service in late October, which is backed by Lala. "We have enjoyed a good relationship with Apple for many years, and that continues to be the case," R.J. Pittman, Google director of product management, told BusinessWeek. "We are agreeing to continue to leave the service as it is." An Apple spokesman declined to comment to BusinessWeek regarding the issue. There is already speculation that Apple's Lala purchase could lead to a web-streaming model for iTunes, which would directly compete with Google's service.
More on Apple, LaLa and the future of iTunes
There's an interesting article at The Wall Street Journal (WSJ) today (subscription required) suggesting that Apple's recent acquisition of LaLa could mean a web-streaming model for a future version of iTunes. The speculation began last week, and today more information has emerged. Quoting a source "...who has been briefed on Apple's plans," the WSJ reports that LaLa executives have been given key roles at Apple, and that members of the existing iTunes team will report to them. The article also reiterates the $85 million price tag, which TechCrunch recently disputed. While a streaming model makes sense for both Apple and consumers -- Apple could sell music through search engines, etc. while customers could eliminate space-hogging libraries from their computers -- such a move would be a radical departure for Apple, which has insisted that customers want to "own" a physical copy of their music. Lala's service scanned your hard drive for songs you own to stream at will (think a web-based version of Apple's Home Sharing). Songs you don't own could be streamed for $0.10 each with a download "upgrade" available. All of this would require huge amounts of storage and bandwidth from Apple. Perhaps that's what the new North Carolina server facility is for. As for Apple, mum's the word. "Apple buys smaller technology companies from time to time and we generally do not comment on our purpose or plans," said Apple spokesman Steve Dowling. [Via Mac Rumors]
Switched On: Apple's song remains the same
Ross Rubin (@rossrubin) contributes Switched On, a column about consumer technology. 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.
Apple's purchase of Lala sparks price confusion
Did Apple's purchase of music streaming service Lala cost the company $80 million, or 17 million? Probably the latter, at least according to Techcrunch. $80 million seemed like an awfully large price tag for a service that's only a couple years old. Michael Arrington at TC claims to have sources who say the purchase price was $17 million instead of the previously reported $80 million. He also explains that the sources aren't directly related to the purchase, they just have some mysterious knowledge of the situation. Good source or not, the math makes more sense after reading into it a little bit more. Lala itself was valued at about $180 million but so far has only gathered $35 million in investments. With the theoretical purchase price of 40 to 50 cents per dollar, it could look like $80 million is a viable purchase price... but then you have to take into account that the company only raised $35 million in venture capital. Would Apple really pay more than double the company's total even if the valuation is much higher? If you take in the probability that Apple paid 40 to 50 cents per dollar on the $35 million, that would give you the $17 million figure pretty easily. It's all up to speculation at this point: the price and the purpose. Some say that Apple doesn't give a rip about the actual streaming service, but that they really purchased it for the engineers behind the project. Others are getting excited to see what music streaming would mean to Apple and iTunes. I'd encourage you to leave your hope where it is... the possibility of a music streaming package on iTunes seems a little weak. However, we've been surprised before. Either way, the $17 million purchase price would make it a steal of a deal considering that Lala supposedly had $14 million in the bank. If Apple is allowed to retain Lala's deal with Google (search results and streaming for titles of popular songs), it would make that $3 million investment look pretty good.
Talkcast tonight, 10 pm: Apple sings a new tune with Lala acquisition
We had a delightful chat last week with our friend Dan de Grandpre from Dealnews as we dove into the early information from Black Friday and looked forward to Cyber Monday. Beth Gladstone from WalletPop wasn't able to be with us, but she's promised to come back another Sunday very soon. You can download the shows direct from Talkshoe or subscribe on iTunes. Tonight, we're back live at 10 pm ET with the usual gang of ruffians, plus our frequent guest Ross Rubin of Engadget and NPD, as we mull over the Apple acquisition of Lala. Do join us! To participate on TalkShoe, you can use the browser-only client, the embedded Facebook app, or the classic TalkShoe Pro Java client; however, for maximum fun, you should call in. For the web UI, just click the "TalkShoe Web" button on our profile page at 10 pm Sunday. To call in on regular phone or VoIP lines (take advantange of your free cellphone weekend minutes if you like): dial (724) 444-7444 and enter our talkcast ID, 45077 -- during the call, you can request to talk by keying in *-8. If you've got a headset or microphone handy on your Mac, you can connect via the free Gizmo or X-Lite SIP clients; basic instructions are here. Talk with you then!
WSJ confirms Apple purchase of Lala
Well that's that, apparently. Although this story has evolved quite a bit over the day, according to Peter Kafka over at All Things Digital, Apple has indeed coughed up the dough for music streaming service Lala. If you believe what you read in the report (and you probably can, Kafka tends to be a straight shooter), Apple's snapping up the company for what will amount to a bargain-basement price... possibly less than $.50 on the dollar. However, Kafka says at least one source claims his valuation of the deal is off, but we'll have to wait for some official word before we know for sure. If this turns out to all be true, the lingering question is still about Apple's reasoning behind the purchase -- is the company after a particular technology, or is there a service in the offing? Hopefully we'll know soon. Note: If you want a little background on Lala, Ross Rubin has covered the service extensively in his Switched On column.
Lala bought by Apple, streaming iTunes Store around the bend?
Earlier today, Greg Sandoval at CNET reported that Apple was in talks to buy out music-streaming service Lala; his piece suggested that these talks were in advanced stages, and a deal could happen at any time -- Apple just needed to sign on the dotted line. As of this evening, Sandoval's rumor is looking a lot more like a done deal. The Wall Street Journal and the NY Times are both confirming that Apple has pulled the trigger and spent a minuscule fraction of those billions in cash on Lala. No numbers were announced, but the WSJ notes that an investment of $20 million in Lala from Warner Music Group was written down by more than 50% earlier this year. Why Lala for Apple? The AP noted that Lala co-founder Bill Nguyen demoed an iPhone app in October that allowed 'intelligently cached' songs to be streamed to your iPhone, with the recently-streamed songs replayable even outside of cell coverage areas; Wired suggests that Lala's bundle-payment setup, where users buy stream credits, could save Apple's iTunes Store millions in credit card fulfillment charges. The deal is expected to put Nguyen and the Lala engineers on Apple's payroll, although the Times notes that Lala's agreements with the labels to stream music are non-transferable. Lala's model for music streaming is an interesting one; the service scans your hard drive for songs you already own and lets you stream them at will, taking the concept Apple's also providing with Home Share to the Web (other services also let you share media between iTunes instances). You can also choose to stream songs you don't already own for $0.10 a piece, and 'upgrade' to a downloadable version at will. Lala also recently made an agreement with Google to offer music previews in Google searches, greatly expanding Lala's reach. It's not clear whether Apple's purchase will have any affect on that arrangement Is this a streaming service you would like to see come to iTunes? Leave a comment below and let us know!
Apple looking to buy Lala, get into streaming music? (Update: sale confirmed)
There's no deal yet, but Bloomberg and All Things Digital are reporting "confirmed" buyouts talks between Apple and music-streaming service Lala. If it goes down, the deal would potentially bring free music streaming to Apple's iTunes empire, but we're assuming Steve's less interested in integrating Lala's current service than he is in its talent, back-end technology, and content licensing deals. We'll see where this all goes -- or if it even happens. Update: The New York Times and Wall Street Journal are now saying this is a done deal.
Google Audio music service launching soon? (update: seems it!)
So TechCrunch has it from multiple sources that a US (at least) music service launch from Google is imminent. Possibly named Google Audio, it's unclear whether the service will stream music from the major labels and/or offer it as downloadable tracks. Scuttlebutt says that the service will differ from Google's free, search and download music offering available in China since 2008. Now go ahead, kick back and imagine a Google music service tightly integrated with Android while we dig for more details. [Via Pocket-lint] Update: Looks like Google's planning to dive on in with iLike and LaLa, and the whole shindig may end up being called One Box.
Switched On: Lala sells access to a song for a song
Each week Ross Rubin contributes Switched On, a column about consumer technology. If Lala.com has its way, the Web song will do to the MP3 file what the MP3 file did to the CD. The maverick music website, which began as a CD trading site and moved into Internet radio, announced an ambitious plan last year to license the catalogs of the four major music labels as well as those of many independents. It would provide unlimited listening to its members in the hopes of stimulating buying. Listeners would pay only when they wanted to transfer music to their iPods; Lala had even developed a way -- since abandoned -- to transfer music directly to Apple's portable player from its website... circumventing iTunes.Lala eventually got its licenses. But somewhere along the way, the promise of free unlimited listening proved too good to be true, How it now works is that any song you don't have on your local PC but which Lala has made available online in its clean, ad-free user interface can be listened to for free, but only once, after which it must be purchased. One option for purchasing is the the "web song," which is essentially access rights to a track that you can stream indefinitely, but cannot download.The benefit, in addition to not having to manage a library of files, is the price -- a mere 10 cents per song or even less when bought as part of an album. And in a nod toward its original philosophy of encouraging "try before you buy", Lala will credit the price of the web song toward the purchase of the MP3 file. Purchased MP3 files are then added to your iTunes library just as they are when music is purchased from the Amazon MP3 store. But even though they can't be downloaded, web songs will have plenty of company with your other tunes.
Switched On: The DAP, the Frap, the pap and the gap
Each week Ross Rubin contributes Switched On, a column about technology, multimedia, and digital entertainment: The iPod and iTunes haven't ostensibly suffered for (and have arguably gained from the) lack of a subscription music service. However, while such services have proven a tough sell to consumers at large, they have their benefits. One is the general liberation from the 30-second sample, a tiny prison of time that makes it difficult to engage in meaningful music discovery, the silver lining in the digital cloud that has been raining on the music industry for so many years. In contrast to Rhapsody, Napster and Microsoft's Zune Pass, which offer several ways within their software for subscribers to hear full tracks in which they might be interested, Apple has recently turned "out of band" for music discovery. The high-profile announcement with Starbucks at the introduction of Apple's latest round of iPods brings the portable devices to where the free music is rather than vice versa. Among Apple's portable music players, the automatic track identification works only with the iPod touch and the iPhone. However, the flat-panel televisions in New York City Starbucks locations also note PCs and Macs as suitable (and prevalent) clients for purchasing music played at the popular coffee retailer. An encouraging aspect of the collaboration between Starbucks and Apple is that the right company is making the brown product. However, one hot spot of trouble brewing in this Half-n-Half is that one can listen to the music only at a Starbucks location. This begs whether Apple would continue such a partnership when the iPhone finally gets access to 3G (perhaps to the scandalous exclusion of AT&T) or whether it or another device such as the iPod touch embrace WiMAX. But extending access to Starbucks' percolated playlists need not wait for such wireless advances. The two companies could enable access via a simple option in iTunes that would stream Starbucks' Hear Music XM station -- or an equivalent -- via any broadband connection.
