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Apple To Shut Down Lala On May 31 438

Posted by kdawson
from the so-much-for-competition dept.
dirk and a large number of other distressed readers let us know that Apple is shuttering Lala, the music service they bought last December, on May 31. "Apple will transfer any remaining money in a user's account to iTunes, and will credit users (via iTunes) for any web songs that were purchased. It's a real shame, as Lala was a much better music service, offering songs in straight MP3 format. Its web service was innovative and ahead of its time. And it was one of the few places that would let you listen to an entire song to sample it (after one complete listen, you then could only hear a 30-second sample)." Reader Dhandforth adds: "10-cent favorites will now cost 9.9x more. What's worse, a community of music fans (followers and followees) will disappear on May 31. Evil. Sigh."
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Apple To Shut Down Lala On May 31

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  • by Pojut (1027544) on Friday April 30, 2010 @10:43AM (#32045004) Homepage

    ...I know people who did, and none of them are happy about this. I've herad nothing but good things about Lala, it's a shame that it will be going away :/

  • No duh? (Score:5, Insightful)

    by Lunix Nutcase (1092239) on Friday April 30, 2010 @10:44AM (#32045012)

    Because anyone actually thought that Apple was going to keep running two competing music stores?

  • by Hatta (162192) on Friday April 30, 2010 @10:48AM (#32045094) Journal

    No, it's the licensing. You have to negotiate licensing with every music publisher you carry. I'd imagine that the people responsible for Lala don't want to do that because it sounds like hell and they've already cashed out.

  • 3 E's (Score:4, Insightful)

    by Slash.Poop (1088395) on Friday April 30, 2010 @10:50AM (#32045134) Homepage
    Embrace
    Extend
    Extinguish
  • by Anonymous Coward on Friday April 30, 2010 @10:52AM (#32045170)

    That is the correct usage

    http://garyes.stormloader.com/its.html

  • by loufoque (1400831) on Friday April 30, 2010 @10:53AM (#32045190)

    You should get a refund of your money, not have it be transferred to iTunes.
    What you agreed to pay for was Lala's service, not iTunes'.

  • Re:3 E's (Score:2, Insightful)

    by Super_Z (756391) on Friday April 30, 2010 @10:54AM (#32045208)
    Actually, Lala extingushed themselves due to a business model that did not include a "profit" part. But why be rational when you can bash Apple for picking up the pieces?
  • by Anonymous Coward on Friday April 30, 2010 @10:56AM (#32045228)

    Apple has always been more innovative than Microsoft. Their desktop OS has been years ahead of Windows for most of the past decade, and now their malicious business approach is beginning to surpass that of Microsoft's.

  • by Princeofcups (150855) <john@princeofcups.com> on Friday April 30, 2010 @10:56AM (#32045236) Homepage

    Or maybe it's just that their business model didn't work. Everyone's favorite companies are those that are giving free services and running at a loss, and then they complain when they turn to advertising, subscriptions, or just go belly up. iTunes is a sustainable business model, and Lala is not. Deal with it.

  • Re:3 E's (Score:5, Insightful)

    by gclef (96311) on Friday April 30, 2010 @10:56AM (#32045238)

    And here Apple has shown once again that they're more efficient than Microsoft: they skipped step 2 entirely.

  • by Em Emalb (452530) <ememalb.gmail@com> on Friday April 30, 2010 @10:56AM (#32045250) Homepage Journal

    If I have a car company, and I buy your smaller car company, I can merge your product into mine and remove the competition, thereby increasing my profits.

  • by Rogue974 (657982) on Friday April 30, 2010 @11:00AM (#32045312)
    Yes, you are missing something. When you purchase a company, you get the assets, their Intellectual property (IP), employees (they can of course quit later), customers, etc. Apple can go and make ITunes better by using the IP they just acquired, or they can get the employees because they need more to work on their stuff and they like what LaLa did, they can continue to run 2 music stores and get the profit from both, or they can trash the one they bought and have a new customer base (customers are of course free to jump ship. Apple didn't seem interested in the tech, just the customer database. They have a bunch of new customers who had account credit with LaLa that is now ITunes credit. Some of the customers will request refunds, or spend it and jump ship, but a number of them will just accept it and start using ITunes.
  • Evil? (Score:4, Insightful)

    by whisper_jeff (680366) on Friday April 30, 2010 @11:04AM (#32045368)

    Reader Dhandforth adds: "10 cent favorites will now cost 9.9x more. What's worse, a community of music fans (followers and followees) will disappear on May 31. Evil. Sigh."

    Evil? Evil?

    You keep using that word but I don't think you know what it means.

  • I personally have a dozen devices (many of them older) that'll play those 128k MP3 files as is, and NONE of them can process an AAC file.

    While the sound quality of the AAC file is miles better, 128k VBR MP3 is good enough for many portables, and I can certainly understand folks being grumpy about now having to perform a format conversion before being able to listen to their purchased music files...

  • Re:No duh? (Score:3, Insightful)

    by jgagnon (1663075) on Friday April 30, 2010 @11:18AM (#32045588)

    Makes you wonder why they purchased it in the first place...

  • Re:3 E's (Score:5, Insightful)

    by icebraining (1313345) on Friday April 30, 2010 @11:26AM (#32045700) Homepage

    Then why has Apple spend $80 million to buy it just so it could kill it three months later?

  • by Delusion_ (56114) on Friday April 30, 2010 @11:37AM (#32045886) Homepage

    MP3 can be encoded at levels which achieve transparency - just like any other modern audio codec. While I'm not really up on what encoder and bitrates Lala used for its MP3 offerings, the notion that your music just sounds better than my mp3 library assumes that I am encoding MP3s at below-transparency levels, and that you are encoding your AAC, Ogg, or whatever lossy format at transparency levels, or that you are using a lossless codec and that somehow transparency "isn't enough".

    This is incorrect, sir. MP3 as a format choice isn't the sole (or even main) criteria for most people who use it. MP3 is able to achieve transparency, its file sizes are reasonable (LAME encoding at v0 comes to mind), it's compatible with any hardware or software that one will encounter in the real world, and if your friend asks you for a copy of that latest Autechre album, you don't have to pontificate about how your chosen encoding format is better than their chosen encoding format, despite the fact that their software may not support it and their factory-included car CD/MP3 player most certainly won't. A 3% file size decrease with, say, Ogg, simply isn't compelling when it means putting up with the fact that a lot of hardware doesn't support it.

    I'm here for the music. Give me transparency, and give me ubiquity. Your claim that you can achieve a better sound at "x" bitrate is not compelling when the file size of MP3 is not obscene, and when both formats can achieve transparency at a reasonable bitrate. Not having to pontificate about audio formats that hardly anyone actually uses? Hell, that's just icing on the cake.

  • Re:3 E's (Score:4, Insightful)

    by s73v3r (963317) <.moc.liamg. .ta. .r3v37s.> on Friday April 30, 2010 @11:43AM (#32045960)
    Because they had tech Apple wanted? YouTube was horribly unprofitable, so why did Google spend billions buying them?
  • by gyrogeerloose (849181) on Friday April 30, 2010 @11:50AM (#32046080) Journal

    They've successfully done it once, though. Seems like an easy way to generate that cash AGAIN when someone else comes along to buy them up, since they won't be competing with their predecessor.

    You can bet that Apple added a no-comptete clause to the contract; in return for Apple's cash, the Lala crew agrees not to create a competing service for x number of years. Standard Operating Procedure in those situations.

  • by box4831 (1126771) on Friday April 30, 2010 @11:55AM (#32046170)
    Correction:

    Steve jobs sticks his fat wads of cash in his ears.. "LALALALALALALALALA"
  • itunes.com (Score:1, Insightful)

    by Anonymous Coward on Friday April 30, 2010 @11:56AM (#32046178)

    Apple will introduce a streaming music service. Apple knows revolutionary ideas when they see them. They do have to renegotiate the licenses.

    Am I happy? No.

    But I realize there is evidence that Apple is launching such a service.

  • by Mr. Underbridge (666784) on Friday April 30, 2010 @11:58AM (#32046194)

    Buying and shutting down competitors is incredibly common, even if the competitor is losing money it can still make good business sense. You do it if they have some IP you want (a patent, for example), or if you're afraid they will set a poor legal precedent that will hurt you (Google buying Youtube), or if you just want their customer list.

    Right. But those reasons don't apply well here. There doesn't seem to have been an IP issue. Not aware of any legal issues. I think iTunes has all the customer lists it needs.

    Most likely reason here is the obvious - Apple paid Lala "Go away" money. Apple wants to be the predominant online music vendor, and they identified a company with a business model that could potentially threaten iTunes' market share. So they bought them and shut them down. The motive is obvious and there's nothing to be done about it.

    Lala's streaming part of their business model may have had problems with paying for streaming rights

    Doesn't pass the smell test. Recall that they were bought 6 months ago. Not years, months. How likely is it that their core business, which was worth $80M 6 months ago, is now worth $0? Note that Apple isn't even spinning it off, or selling the unit to someone else. I'm not aware of any IP or other considerations that pushes that current $0 value northward. They're just shutting it down and writing it off.

    Again, there's only one reason that isn't completely stupid - the cessation of Lala's operation is worth more than $80M to Apple over the long term. From their standpoint, isn't $80M of insurance worth it if it helps you take out a promising young competitor before it's too late?

  • by Yamata no Orochi (1626135) on Friday April 30, 2010 @11:58AM (#32046196)

    That doesn't seem very conducive to a competitive market. :(

  • Re:Straight MP3? (Score:5, Insightful)

    by 99BottlesOfBeerInMyF (813746) on Friday April 30, 2010 @11:58AM (#32046202)

    but for all practical purposes is useless outside of the iTMS walled garden.

    What are you talking about? How is it useless? It plays on pretty much every modern software and hardware music player made. It plays on the frickin' Zune. Zen, Archos, Sansa, Sony, even the PSP. Songbird, Mplayer, WMP, and everything else I can think of.

    Seriously, back in the day before anyone but Apple used it, it was a valid argument to say you wanted to use the more compatible .mp3 instead of the more efficient .mp4, but now I wonder what you're using that it isn't compatible with.

  • by gyrogeerloose (849181) on Friday April 30, 2010 @12:00PM (#32046228) Journal

    Now I might be missing something, but what did they gain through this acquisition?

    Probably some slick little bit of code that Lala used in their streaming severs. $80 million is chump change to Apple and they no doubt did the math and figured it would cost them more to develop something similar in-house. Also, no worries about software patent lawsuits this way.

  • by Ma8thew (861741) on Friday April 30, 2010 @12:07PM (#32046316)
    You agreed to buying it DRMd at the time. If you didn't like it you shouldn't have bought it.
  • by Anonymous Coward on Friday April 30, 2010 @12:08PM (#32046324)

    No NO NO,
    The Steve Job Icon needs to be the man on the big screen from the 1984 video.

  • by geekoid (135745) <dadinportland AT yahoo DOT com> on Friday April 30, 2010 @12:08PM (#32046334) Homepage Journal

    Please stop spreading that lie. It has been demonstrated to be false. You can encode MP3 a a rate that is undetectable.

    It can also encode at a rate that makes is sound like it's coming out of the bottom of a tin can.

  • by Anonymous Coward on Friday April 30, 2010 @12:09PM (#32046340)

    Vergès: I believe that everyone, no matter what he may have done, has the right to a fair trial.

    It's a sad day for the world when opinions like this are enough to make you "notorious"

  • by sbeckstead (555647) on Friday April 30, 2010 @12:11PM (#32046374) Homepage Journal
    Oh but it is. The essence of competition is eliminating competitors. Successfully competing means you win. How do we not understand this. Everybody seems to think that in order to have a product you must have competition, when in fact the perfect business model flourishes on no competition.
  • by ThrowAwaySociety (1351793) on Friday April 30, 2010 @12:17PM (#32046456)

    Well......

    I hear people objecting about media consolidation.[...] so they can control what gets shown or not shown on broadcast

    Except the Internet is a totally different world.

    Old world distribution channels are limited by the number of venues, whether those are radio stations, TV channels, concert halls, or feet of shelf space on record stores. In the old world, artists would be shut out if radio stations wouldn't play them or if Wal-Mart and Barnes and Noble wouldn't put them on the shelves. Consolidation in the old world meant even fewer venues, and fewer venues meant less variety.

    iTunes sells every song it can get a license to sell. There's no limit to its shelf space, or how many channels it has. New artists aren't going to be shut out of iTunes because there isn't enough room.

    The only risk for consumers is that the lack of competition will drive up prices. Luckily, there are still Amazon and other online stores competing with iTunes. And really, since the RIAA cartel restricts the prices for iTunes and everyone else, that's not really an issue anyway.

  • Re:Straight MP3? (Score:2, Insightful)

    by base3 (539820) on Friday April 30, 2010 @12:20PM (#32046496)
    Okay, so some commercial players have jumped on the bandwagon (and I doubt mplayer's codecs are technically legal), but MP3 is still more compatible and more common. How about car stereos--do CDs full of AAC files work as well as CDs full of MP3s?
  • Not the right meme (Score:4, Insightful)

    by ThrowAwaySociety (1351793) on Friday April 30, 2010 @12:26PM (#32046596)

    Embrace

    Extend

    Extinguish

    This gets +5 insightful?

    EEE does not mean "buy out your competition." EEE means "subvert and discredit your competition, forcing them out of business."

    An EEE strategy in this case would be:
    1. Embrace: Announce that iTunes will become a Lala client, with full support for all Lala features
    2. Extend: Offer new, proprietary features through iTunes that are not available through the regular Lala website, fostering dependence on iTunes as a Lala client
    3. Extinguish: Remove support for Lala from iTunes, leaving all Lala users dependent on iTunes

    In an EEE strategy, Lala would not have gotten a dime from Apple. Apple did not EEE Lala, Lala sold out to the man, plain and simple.

  • by ThrowAwaySociety (1351793) on Friday April 30, 2010 @12:33PM (#32046702)

    If only I could get a refund for my hundreds of web songs :(

    Serves you right for paying for a license to listen to music instead of a downloaded file that you keep.

    Anyone know of a service that sells downloadable, DRM-free music that you can copy to unlimited computers, burn to CD, back up, and maybe use with iPods?

    I think the Amazon music store can do that. I wonder if there are any others....

  • by eldavojohn (898314) * <eldavojohn AT gmail DOT com> on Friday April 30, 2010 @12:37PM (#32046746) Journal

    iTunes is not in and of itself profitable.

    You're a fool. They're celebrating billions of iTunes song sales and you're telling me that they're taking a hit on each of them? Is that why The New York Times calls it a "profit machine" [nytimes.com]? Is that why Billboard estimates they made a half billion in profit from song sales one year [wired.com]? The most conservative estimate I can find puts them closer to a 10% profit margin on song sales [coolfer.com] which means that their billions in revenues equates to hundreds of millions of dollars.

    I tell you what, though. I'm such a nice guy, I'll take the iTunes Media Service off Steve Job's hands and keep supporting only his iPods. I'll start accepting the "loss" and "risk" you seem to associate it with.

    There's no way that Lala could have been profitable.

    Really? The pricing structure I laid out for you didn't look like it could possibly net some profit?

    Here, let me help you out with what actually happened. Jobs saw Lala make some innovations like 10 cents to stream a song as much as you like. He got a bunch of consultants to analyze what would happen if iTMS started doing that. And they said that he would still make money but it wouldn't be the drastically high amount he makes because those streamers would opt for that instead of buying the full price song. So he had a choice. Take some undetermined loss by meeting Lala's functionality and compete with them ... or drop $80 million and burn Lala to the ground. I think he made the right choice for his company and the wrong choice for consumers and actual competitive capitalism. Can't blame him but you're a fool if you think he's losing cash on iTMS. I'm not even a businessman and this is painfully obvious to me.

  • by StikyPad (445176) on Friday April 30, 2010 @12:41PM (#32046816) Homepage

    Yeah, ok. I'll see your cross-platform MP3 virus with an attack vector that only works when copying files from a Windows machine, and raise you an FSM, two pink unicorns, and a hot chick married to an old man for love.

  • That doesn't seem very conducive to a competitive market. :(

    Tell that to the Lala owners who, rather than make their money selling songs to individuals at 50 cents a pop, chose to make their money selling in one giant transaction to their competitor, Apple. Good for them.

  • by Anonymous Coward on Friday April 30, 2010 @01:04PM (#32047110)

    If the price goes from $.10 to $.99, isn't that 8.9x more, and not 9.9x more as stated?

  • Yes its horrible! we aren't buying the latest iCrap or filling landfills with working gear while we chase being the owner of the biggest ePeen! the horror! How UnAmerican! In case you didn't realize that was this thing called sarcasm. I have a 2 year old Sony CD/MP3 player with remote in my truck, and a Sandisk M260 in my pocket. Both play MP3, WMA, WAV (Sony adds ATRAC) but neither will play AAC.

    You will also be quite horrified to know that I don't own an iPod, or an iPhone, or anything electronic that starts with a little i, never used iTunes, or even contributed to Steve Jobs bank account. Of course Steve's highly patented RDF may be wearing off when even Jon Stewart [cnn.com] is ripping on Apple. I know, it is socialism to even THINK of not supporting Sir Steve!

    Sorry, that pesky sarcasm thing reared its ugly head again. Go back to your shiny walled gardens that are so locked down Steve Ballmer can only look at them and cry. Poor little Ballmer monkey, best he could do was squirt some WMA on the Zune.

  • Of course, I had to google that. Here's the full interview:

    http://www.spiegel.de/international/world/0,1518,591943,00.html [spiegel.de]

    An extraordinarily interesting interview, to say the least. Well worth a full read.

  • by DrgnDancer (137700) on Friday April 30, 2010 @01:42PM (#32047538) Homepage

    This. If anyone is "evil" here it's the owners of Lala. You have this service. Lots of people like your service. You sell your service to a larger competitor, knowing full well they either a) plan to close it down and absorb everything useful, b) will give it half a chance, but in the end will probably shut it down and absorb it. Now the larger competitor is evil when they shut it down and absorb it? Since there was no hostile take over here, there are just a few possible scenarios:

    1) Lala was doing well, but the owners wanted more. Apple offered them a large pile of money and they accepted. They knew Apple was planning to shut them down in the near future, and didn't care.

    2) Lala was doing well, but the owners wanted more. Apple offered them a large pile of money and they accepted. Apple told them they had six months and X more piles of money to make the business profitable, or they would shut it down and absorb the useful bits. They failed. They probably cared some, but they would have shown it better if they'd just not sold out in the first place.

    3) Lala was failing. Apple bought it and propped it up for an extra 6 months while they prepared to absorb it. The owners knew this, but either thought it was worth it to keep the service around as long as they could, or just wanted their parts of the pile of money.

    4) Lala was failing. Apple bought it and propped it up for an extra 6 months to give the former owners (now managers) a chance to make it profitable. They failed and now Apple is going to absorb the useful bits.

    That's really about it. The various scenarios present different levels of "evil" on the parts of the owners, but in the end they basically boils down to: either the owners sold out, knowing full well they might be signing the services death warrant, or the owners sold out to keep a sinking ship afloat a little longer and hope for a miracle. In either case I seriously doubt Apple bought the service promising on their crossed hearts to keep it running forever regardless of profitability.

  • Re:Straight MP3? (Score:1, Insightful)

    by base3 (539820) on Friday April 30, 2010 @02:45PM (#32048412)
    If you were comparing one compressed audio format to another, that'd be fair. Your friend with the 8-track isn't using a ubiquitous format anymore, either. The use of AAC/M4A by Apple is form of vendor lock-in, albeit somewhat softer now that they sell some audio tracks without DRM (thank you, Amazon!).
  • Re:Evil Empire (Score:3, Insightful)

    by HiThere (15173) <`charleshixsn' `at' `earthlink.net'> on Friday April 30, 2010 @04:18PM (#32049892)

    Not every day, but it does seem to be increasing every week, or perhaps just every month.

    Consider that it may be due to changed circumstances. A few years ago when Apple acted evil, it only affected those who were committed to it...often idealistically committed. These days it is having a much bigger impact on the average user. So it's more significant when they do something evil.

    If you ever though that Apple was a good company, you just weren't paying attention. This was safe, as there was a large space to go to when you didn't like something they did. If, however, you invest a lot of money in something, say a collection of LaLa music, and you are suddenly told "That music is going away, but we'll give you the cost of it as credits at our new store, where things cost 10 times as much" (I'm relying on another poster for that figure.), then it's understandable if you are less than enchanted with the company coercing you thusly. These aren't people who CHOSE to use Apple, these are people coerced into using them.

    An analogous action happens whenever a company ties you into a long-term service agreement, and then raises the price a lot in the middle of the agreement. This is clearly "Bait and Switch", but the usual laws don't usually cover this technique. So the people who get shafted are unhappy with the entity applying the shaft. (N.B.: In some of these deals, the entity applying the shaft had no say in what would happen. Like the way the phone company collects taxes. There are commercial analogues to that measure, which insulate the malefactor from public anger over the results of his misdeeds.)

    Apple has deserved bad press ever since the days of the Apple ][. They also generally deserve all the good press they get, and that's been continuing. (If you check, you should see that there are also more stories praising Apple ;than there were in an equivalent period a year or two ago.) But when most of the people affected by Apple's actions were committed to them, bad press wasn't interesting to anyone, and good press was mainly interested to those committed. Now there's a broader base for the stories, and a lot fewer of them are willing to uncritically praise Apple.

  • by sorak (246725) on Friday April 30, 2010 @04:23PM (#32049956)

    No NO NO,
    The Steve Job Icon needs to be the man on the big screen from the 1984 video.

    With an iPod control interface at the bottom?

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