Apple buy music streaming service Lala
Posted on December 16th, 2009 by Lee Jarvis in Lee Jarvis, Music Industry News
I’ve always liked Apple. They may not have invented digital music, or the portable digital player, but they fine-tuned them and distributed them to mass markets to perfection. More music is being heard by more people in more places than ever before, and for that, we should be grateful. (Figuring out how to strategize and monetize these new markets is a different matter.)
It seems that iTunes has ruled the mp3 generation, but times and trends are moving ever faster, and there’s now a whole new generation of consumers that may never even own an mp3. Streaming is big business these days. Enter Lala, one of several successful (read: popular but not entirely profitable (yet?)) online music streaming services that has established itself with the non-owning and mobile music markets. Being able to listen to music through a web browser is something that gives music fans greater freedom, and access to their collection from any computer, smart phone or other mobile device, and is something that Apple lacks within iTunes.
Apple may well be looking at using the Lala team and functionality to enter into the streaming market, and with the way they have revolutionized similar parts of the music industry, who knows what may be in store.
One thing I hope Apple does figure out, is if they are paying $17m or $80m+ for Lala assets. Either way, it is a lot of money for a service that has et to find a profitable business model. Moving from CD-swapping to a (comparative to Pandora and Spotify) complicated streaming system has proved difficult, and investor Warner Music wrote down $11 million of the original $20 million it put down.
Lala had recently struck deals with both Google and Facebook, hoping to widen it’s user base with new search traffic and gift options. Apparently Google was also looking at acquiring Lala, and having narrowly missed out they may try and pursue other deals in the near future. Finding a way to tie it’s music search division in with either a download or freemium/ ad-funded streaming service seems inevitable, and well within Google’s scope. In fact, there have been several similar deals in recent months. Imeem was bought by Myspace, whom also previously acquired iLike.
Although Apple’s future movements may not be yet announced, I am certain they will continue to push the digital music industry forward (and outwards) with their services and reach new listeners across the globe.
Lee Jarvis.
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Tags: Apple, digital, google, iTunes, lala, mp3, music, streaming, warner music
December 16th, 2009 at 12:16 pm
Very interesting on a number of levels. Do you think that this will become a standard acquisition model for larger corporations looking for a foothold in the streaming market?
It also raises an interesting licensing question. I don’t propose to know the details of Lala’s agreement with the respective collection agencies, but I know a considerable barrier to entry for any broadcaster (internet distribution) is the licensing. Are the big boys picking up ‘illegitimate’ (read: non-license paying) broadcasters and legitimizing them, or are the broadcasters at such a level already that (even though perceived small and unprofitable) are actually capable of generating enough income to pay these fees? If the former is the case, can these broadcasters hope to maintain artistic integrity with the money men constantly hovering? And if the latter, can we even consider these ‘fledgling’ broadcasters to really be smalltime? Should the entrepreneur dance the line of illegal activity in the hope to be one day swallowed by the big fish, or do you need significant funding before even considering this game?
December 16th, 2009 at 1:10 pm
This is pretty big. If Google and Facebook go in together and get LaLa… They would not only rival the Myspace/Imeem team but pull the rug out from under it. Facebook already is preferred by the majority over Myspace, and well Google is, let’s face it, slowly taking over the world. I think that trio would be unstoppable – but in a very cool way. I look forward to seeing the technological possibilities that could this could bring about.