Apple buys digital music service Lala

Chris Caceres · December 5, 2009 · Short URL:

Apple is looking to step into the world of online music streaming

As services like Pandora make the purchase of online music less appealing, Apple is taking steps to broaden its music offering.

Apple on Friday acquired Lala, a music streaming service, for an undisclosed amount, according to published reports.  

The move is a smart one for Apple for multiple reasons.

First of all, music piracy is not going away.  Any album these days can be downloaded illegally via Bitorrent, either the day it comes out or weeks before. 

Apple's current iTunes model sells albums at prices a little less expensive than actually going out and buying the CD, usually around $9.99 for album.  iTunes also let's users buy individual songs off these more popular albums anywhere from 69 cents to $1.29 a pop.  If you really think about it, how much different is it to buy an album off of iTunes than it is to buy a CD...not much.

On the other hand, music streaming and subscription based services are quickly on the rise. Music recommendation site Pandora attracts some 10 million monthly unique visitors. The service gives users access to unlimited music for free. The only cost is having to listen to a few audio ads. 

Here in the US we have Rhapsody, a subscription-based music service that lets you pretty much listen an unlimited amount of music from about 6 million albums for $12.99, about the price of one album.  At the same time, Rhapsody also has a new feature called Rhapsody To Go which lets users listen to any of these 6 million songs on their portable devices.  And guess what, there's an App for that.  A couple months ago, Rhapsody was approved on the iPhone letting users stream music right to their device, eliminating the need to actually download mp3's all together.  Spotify has a similar service but isn't available in the US yet.  

When you take a look at Lala, you'll notice a sort of middle ground.  Lala will let any user listen to a song on its site once, for free.  After that, customers can buy the track for 10 cents, but it lives on the Web and they can't download it, they can only here it on their computers when they are online.  Lala has a library of about 8 million songs and deals with major industry players including EMI Music, Warner Music, Sony BMG Music Entertainment and Universal Music Group.  Lala is also now providing previewable music via Google's music search feature.

Now that  Apple has purchased Lala, we should expect to see some sort of a subscription based offering from iTunes, where users buy songs at less expensive prices, but they live in the cloud.  Once they cancel that subscription, they wouldn't be allowed access to those songs anymore.  

Lala has raised a total of $35.1 million in funding since it launched back in 2007.  Investors include Bain Capital Ventures, Ignition Partners, and Warner Music Group.

Support VatorNews by Donating

Read more from our "Trends and news" series

More episodes

Related Companies, Investors, and Entrepreneurs



Joined Vator on

Lala is a music collection for the way you live -- online.
Take your music and fuse it with a massive licensed catalog to easily play, buy and share on the web.

With Lala you can:
* Play over 6 million songs for free – no ads or clutter.
* Play your existing music collection from any computer for free.
* Discover music through friends and experts.
* Buy new music starting at 10 cents



Joined Vator on

Pandora, the leading internet radio service, gives people music they love
anytime, anywhere, through a wide variety of connected devices: laptop and
desktop computers, smartphones, connected BluRay players, connected TVs,
etc. Personalized stations launch instantly with the input of a single “seed” –
a favorite artist, song or genre. The Music Genome Project®, a deeply
detailed, hand-built musical taxonomy, powers the personalization or
Pandora. Using this musicological “DNA” and constant listener feedback
Pandora crafts personalized stations from the more than 800,000 songs that
have been analyzed since the project began in January 2000.
More than 75 million people throughout the United States listen to
personalized radio stations for free on Pandora through their PCs, mobile
phones and devices such as the iPad, and connected in-house devices
ranging from TVs to set-top boxes to Blu-Ray players. Mobile technology has
been a significant factor in the growth and popularity of Pandora, starting
with the introduction of the Apple app store for the iPhone in the summer of
2008. Pandora instantly became one of the most top downloaded apps and
today, according to Nielsen, is one of the top five most popular apps across
all smartphone platforms.

Pandora is free, simple and, thanks to connectivity, available everywhere
consumers are – at the office, at home, in the car and all points in between.
In 2009 the Company announced that Pandora would be incorporated into
the dashboard in Ford cars via SYNC technology; GM has already followed in
announcing plans to integrate Pandora into its vehicles and Mercedes-Benz
introduced their Media Interface Plus device that works with the
free Pandora iPhone app to provide direct control of Pandora from in-dash
stereo controls. This was all great news for the millions of Pandora listeners
who had been plugging their smartphones into car dashboards to listen to
personalized stations while driving. More than 50 percent of radio listening
happens in the car, making it a crucial arena for Pandora.

Today tens of millions of people have a deeply personal connection with
Pandora based on the delight of personalized radio listening and discovery.
These highly engaged listeners reinforce the value Pandora provides to: 1)
musicians, who have found in Pandora a level playing field on which their
music has a greater chance of being played than ever before; 2) advertisers,
who benefit from the multi-platform reach of Pandora, as well as its best
practices in targeting consumers for specific campaigns; 3) the music
industry, which has found in Pandora a highly effective distribution channel;
and 4) automobile and consumer electronics device manufacturers, who have
noted that incorporating Pandora into their product makes it more valuable
to consumers.

Pandora continues to focus on its business in the United States. The radio
arena has never been hotter, thanks to technology that enables radio to be
personalized to the individual and more accessible than ever before. Right
now millions of people listen to Pandora in the United States and we hope
someday to bring Pandora to billions of people around the world.

• 2000 – Tim Westergren’s Music Genome Project begins.
• 2005 – Pandora launches on the web.
• 2008 – Pandora app becomes one of the most consistently downloaded
apps in the Apple store.
• 2009 – Ford announces Pandora will be incorporated into car
dashboard. Alpine and Pioneer begin selling aftermarket radios that
connect to consumers’ iPhones and puts the control and command of
Pandora into the car dashboard.
• 2010 – Pandora is present on more than 200 connected consumer
electronics devices ranging from smartphones to TVs to set-top boxes
to Blu-ray players and is able to stream visual, audio, and interactive
advertising to computers, smartphones, iPads, and in-home connected