Apple Buys Lala Music Streaming, But Why?

Apple has snapped up music streaming biz Lala in what many initially thought to be a move to step beyond the strict download market of iTunes. On closer inspection it seems that Lala was a somewhat less-than-ideal target and Apple may just be gunning for ready-made engineering talent. "On balance, the purchase appears to give Apple the chance to bring in engineers that will be useful now, and could be even more so if it chooses to enter streaming or subscription services. But, for the moment, there's nothing about the purchase that seems to provide the company with any key technologies it was missing in terms of diving into markets. Until another company demonstrates that there's money to be made (or iPods to be sold) through streaming, there's no reason to think that a move of this sort is imminent."

Article summary appears to have it backwards

[znu]

The initial NYT article about the acquisition said it was only talent related, while a more recent Reuters article [yahoo.com] has the following quote:

A source familiar with the matter said the iPod, iPhone and Mac maker is seeking new ways to expand iTunes to move it beyond being a predominantly download service for songs. The source asked not to be named.

"Apple recognizes that the model is going to evolve into a streaming one and this could probably propel iTunes to the next level," said the person.

The truth is, nobody really knows what Apple is up to. Which is, of course, just how Apple likes it. I wouldn't put it past them to have deliberately leaked a couple of conflicting stories just to keep everyone guessing.

Re:One Word

[99BottlesOfBeerInMyF]

Google Search for any song online via Google and Lala brought a stream right to you. First listen is free, after that you have to pay. Why would Apple buy them? Considering most sane people use Google and Lala doesn't require something like iTunes, Lala was in a better position to bring music people want directly to them.

That is probably the biggest reason.

This is just eliminating the competition before they got too big. Can I get an Antitrust Amen?

Umm, you don't know much about Lala do you? They admitted that they did not foresee any time in the near future where they would be profitable and as a long term investment were actively seeking someone to buy them to keep the service going. I doubt this will raise antitrust flags since Lala did not have significant market share and what they did have was primarily streaming.

As for the other reasons Apple bought them, besides the Google deal... They have significant engineering talent, they have a solid subscription streaming solution which is missing from Apple's lineup and that solution scales into individual downloads which is Apple's main offering, and they have their service built as a Web service, where Apple has recently started expanding iTunes. In fact, one analyst (UBS ) has already been speculating this signals Apple being serious about making iTunes a Web service that will work with any device and a possible service to run out of Apple's giant new server farm. If so, that would be breaking the exclusive ties between the iTunes store and Apple's hardware offerings which would in fact get rid of Apple's biggest potential antitrust problem.

Hopeful for some personal gain

[teh_commodore]

As a Mac owner and iPod/iTunes user AND a [the only?] paying LaLa customer, I'd be absolutely thrilled if this led to tighter integration between the two products.

Right now, I have iTunes that I use to update my iPod and LaLa which I primarily use to listen to music when I'm on ANY web connected computer. I use LaLa over iTunes at home because I have streams for some songs that I have a paid license to listen to on LaLa that I didn't pay the extra 79 cents to download, so they aren't available in my iTunes.

With LaLa, if I have an internet connection, I can listen to my songs and streams from anywhere, which means I don't need copies of all of my MP3s (or whatever) on my laptop, my work machine, my home machine, etc. It's amazing, and stream licenses are only 10 cents per song.

LaLa also provides a music mover app, which watches my iTunes directory and automatically unlocks the streams in LaLa of the tracks of whatever CD I just imported on iTunes.

Suffice it to say, I love it, and if they integrated the two products, I'd love it even more.

iTunes upload/sync

[mapdock]

Lala offers a feature that lets you upload your iTunes library and keep it synced; I always described it as "like having access to your iTunes library from anywhere online," so I can see Apple being interested from that angle.

Me's failure explains LaLa's acquisition

[akouris]

I think that as arrogant as one might say that Apple is, they have realized that the world of internet/asp services is much different than something that you totally control, in a closed environment of an OS. They learned that the hard way through the numerous shortcomings of Me, a service which was very ambitious, but today still remains very unrealiable and has numerous shortcomings in all categories (mail, calendar, contacts, photos, idisk) when you compare it with other free alternatives. When Me was initially announced, for a brief moment Apple had the chance to turn the market upside down, and be a leader in the ASP/cloud services arena. Today they are not even considered a strong player - Me remains a supplementary service for only a small part of the iPhone base of users. Consider what could have happened with Me if Apple had purchased a number of successful services (Yousendit, Dropbox, Plaxo, etc.) and combined them under one umbrella - their offering would be unmatched, they would have a brilliant team of developers, and today they would probably be leaders in the market. I believe that this is the basic thinking behind Lala's acquisition: they are buying time, which is the next best thing after money: they are buying time they have lost, against Lala.com, Last.fm. They are buying time that they would loose if today they began to develop their own streaming service. They are buying time that it would take them to learn the mistakes others did. With the cash reserves that Apple has right now, if it follows a clever acquisition strategy it can pretty soon gain a significant presence in internet, one that in time would rival that of Yahoo, Microsoft and perhaps even Google. If the rumors surrounding the recent sale of AdMob are true, it seems that Apple is implementing such a plan.

Re:One Word

[Anonymous Coward]

Everyone's afraid of MySpace

http://mashable.com/2009/10/28/google-music-search/

“Now, when you enter a music-related query — like the name of a song, artist or album — your search results will include links to an audio preview of those songs provided by our music search partners MySpace (MySpace) (which just acquired iLike) or Lala. When you click the result you’ll be able to listen to an audio preview of the song directly from one of those partners. ... MySpace and Lala also provide links to purchase the full song."

Pundits grasping at straws ... ?

[gordguide]

Apple never, and I repeat never, does anything without a reason. You can bet the farm that Lala has something Apple wants or needs. More interestingly, when industry watchers cannot quite put their finger on whatever that might be, it usually means that experts are thinking inside the box, and Apple is thinking outside said box.
If Lala has software or technology Apple wants, it's probably because buying it now will save time over developing it in-house. That's been a pattern in the past.
If Lala has contracts or agreements Apple wants, that points to a future business or an expansion of an existing business. Sometimes Apple goes into something obliquely, through a quiet channel that isn't under the magnifying glass like the mother ship inevitably is.
If Lala unknowingly has something that will fit with an existing or future Apple hardware project, well ... it would help to know what that hardware was. Apple won't tell you.
And it may be as mundane as some suggest; that Apple want personnel to fold into a project they are working on. It's happened before as well.
Because of Apple's longstanding policy of not commenting on anything speculative, it might be hard to figure out the angle, even in the future; sometimes with Apple the cards are never laid on the table, and whatever it was quietly dies.

I'm most intrigued in the possibility that they are up to something that isn't obvious and can't be inferred from Lala's previous business. We shall see, I guess.

But, you can be sure there is something going on. More grist for the rumor mill!