How Apple Killed an iTunes Competitor

An anonymous reader writes "Ed Bott recounts the story of Lala.com, an innovative online music service that reached the top of Google search rankings for consumers seeking music. Their prices were frequently better than the prices on iTunes, and they partnered with Google for the search giant's Music Beta. Lala's founder, Bill Nguyen, decided the time was ripe to sell, entertaining offers from both Google and Nokia. Unfortunately, Nokia's offer was poor, and Google tried to lowball Nguyen. Apple, however, was not so foolish. Correctly identifying a threat to its growing music empire, Steve Jobs offered $80 million for the company, and Nguyen accepted. 'The ultimate irony in this story is that quite a few notable members of the Lala-to-Apple team followed Bill through the door and onward to his next venture. They left millions in options at a the $196.48 exercise price they had from the 2009 sale/retention bonuses. Some of those same engineers returned to Apple in the highly covered [Color Labs acquisition] rumor that 20+ engineers went to Apple for $7M. Apple obtained the same employees for pennies on the dollar. This time with even more experience and startup life under their belt. Paying twice was genius.'"

And yet....

[Anonymous Coward]

I still go out of my way to give my business to Amazon or any other legal alternative to avoid doing business with apple whenever possible.

Really not sure what it was they did to piss me off (probably a huge pile of small things over the years) but man I just do not like them.

and they paved the way for spotify

[alen]

if we have learned one thing with IBM and Microsoft is that you can't stop technological and cultural change

subscription music is here to stay and apple can't do anything about it

Lala was not the threat

[Fnord666]

Lala was not the threat. The threat was that Google would acquire Lala and in turn would combine it with their position in the search engine realm. That was the threat and Apple paid the price to keep Lala out of Google's hands. It would have been interesting to see what would have happened if Google hadn't tried to lowball them and had bought Lala at the time.

This is /.

[Anonymous Coward]

Those of us who cared knew about this when it happened, so stop trying to give history lessons and get back to news for nerds. Maybe then I'll bother to log in.

Re:And yet....

[Anonymous Coward]

Don't you forget that Apple played a huge role in making non-DRM protected music from majors available through online stores in the first place?
First majors started to make unprotected music available through competitors so Apple coudn't control the prices and then they made a bold move and made DRM go away from iTunes for the price of some songs being slightly more expensive than the others.

80 Million Isn't Exactly Death

[Anonymous Coward]

The company I own is worth approximately that much, and if ever anyone offered me 80 million for it, the only part of me that would remain would be the cloud of dust dissipating where I had my last presence within its walls.

I didn't start my business because I'm "passionate" about what I do or because I "love" my work. I started it to make money, and for no other reason.

One of the biggest mistakes so-called entrepreneurs make is getting emotionally attached to their work - and I see it happen all the time in my VC club. I've been an angel for a number of startups, but we almost always turn down the ones where the pitch is not much more than how "passionate" the people are about their companies.

Re:Disappointing to read

[DogDude]

It's disappointing how the Microsoft-pioneered "buy up your competitors before they can afford to buy you" technique has become standard practice for Apple.

Oh, child, read some history. That had been going on for at least 100 years before Microsoft existed.

Lala approached Apple, offering itself ...

[perpenso]

From the article: "He [founder Bill Nguyen] called in a few favors and got a meeting with the leadership at Apple. He explained that he had offers from the largest mobile OS competitors and that they wanted to acquire his music startup."

That is not Apple hunting down and killing a competitor. That is a company shopping itself around and playing potential buyers off of each other to maximize the sale price.

My point is that the loss of the Lala service is not entirely Apple's fault. Lala's management deserves to share in that responsibility. They chose a buyer unlikely to continue the service. They apparently did not require a commitment from Apple to continue the service for current customers for a reasonable timeframe.

Re:and they paved the way for spotify

[alvinrod]

And let's not pretend that buying through iTunes or any other competitor is doing the content producers any better. They're still getting pennies on the dollar. If you have $20 and want as much of that to go the artist as possible, go see them live or buy a shirt at a show. They'll make far more money from that than they'll ever see from proceeds from subscription or album sales.

Re:80 Million Isn't Exactly Death

[Jah-Wren Ryel]

But the world definitely would NOT be a better place if all businesses were run like you suggest. Many of the achievements of the modern world required hard nosed business decisions based on purely on profit and without those people the world would grind to a crawl.

That logic is weak sauce all around. The best you can say using that line of reasoning is that the world would not exist the way it does today if not for the decisions that made it that way. There is no way you can say the world would be better or worse using that logic. For all you know, those hard-nosed business decisions killed off a line of research that would have produced cold fusion in the 1900s that would have averted all the world wars and made today a utopia of essentially zero-cost unlimited energy.

Title is misleading

[Taco Cowboy]

I am no Apple fanboys, but the title "Apple kills competitor" is misleading.

Lala.com was for sale. Apple bought it fair and square.

If only Google wasn't so foolish to play lowball, Google would have a powerful franchise right now to out-compete Apple on its own turf.