Apple buys Lala, but what for?
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Apple’s purchase of Lala.com gave analysts and journalists an excuse to engage in one of their favorite pastimes, to wit, Guessing Apple’s Strategy. The company is notoriously opaque about its motives for much of what it does, so there are plenty of opportunities for folks like me to play this game. Anyway, one popular theory is that Apple is positioning itself to offer a subscription music service, based on Lala’s streaming technology.
If that’s what you think, then you’re reading the tea leaves incorrectly. Lala’s business model is based on selling music on an a la carte basis, just like iTunes. It has two key differentiators from Apple’s approach, however. First, its licenses make it feasible for the company to let people listen to songs in full for free before they buy them -- albeit only once. That’s a huge improvement over Apple’s 30-second samples, which are, let’s face it, lame. And second, it sells streamable versions of songs for a fraction of the price of an MP3. These 10-cent ‘Web songs’ stay in an online locker, accessible through any device with a browser and an Internet connection. N.b., that doesn’t include the iPod Classic, the iPod Nano or the iPod Shuffle.
But Lala does have a swell app for the iPhone and the iPod Touch that could make ‘Web songs’ seem like a bargain instead of a crippled version of an MP3. It’s brilliant on the iPhone, actually, because it works through AT&T’s 3G network, which extends coverage far beyond the map of open WiFi networks. Lala’s online storage is precious close to a virtual hard drive on the iPhone.
One other shortcoming in iTunes that Lala solves is that Lala makes it easy to share a song that you like -- once -- with anyone and everyone you know. That’s a great virtual sales tool, particularly when the cost of an impulse buy is 10 cents. Oh and, yes, Lala also holds a prime place in Facebook’s gift lineup and Google’s music search feature, from which iTunes was notably excluded when it launched. Google’s initiative may not be a real game-changer, but the sheer volume of users makes it risky for Apple to ignore.
It’s worth remembering that Lala remains a money-losing business and that (according to Peter Kafka) Apple appears to have bought it for considerably less than what investors, umm, invested. Those are good reasons to think modestly about Apple’s goals.
-- Jon Healey
Healey writes editorials for the Times’ Opinion Manufacturing Division