Apple Lala purchase bad news for companies in crowded streaming music sector

Hammacher Homepage 300x250“Reports that Apple has purchased streaming music startup Lala is bad news for companies in the crowded streaming music sector,” Tom Foremski writes for SIlicon Valley Watcher.

“By acquiring Lala, Apple is signaling that it intends to be a major player in the fast growing streaming music sector,” Foremski writes. “It also shows that Apple is betting on a unique approach towards streaming music services and one that better fits into its current iTunes business model.”

Foremski writes, “Lala offers customers a lifetime license to stream songs from its extensive music library for 10 cents per song. This is a complimentary model to Apple’s iTunes store that offers downloads of songs for 99 cents each.”

“In the US there are numerous startups offering advertising supported music streaming services. Advertising supported music streaming, however, faces challenges as license fees rise,” Foremski writes. “With a paid-model such as that offered by Lala, Apple will be able to offer better licensing deals to the hard hit music industry than revenues from competitors with advertising supported music streaming services. This will be a key differentiator in the forthcoming battles over subscribers to music streaming services.”

Foremski write, “Unlike music subscription plans where access to music stops when payment stops, Lala users retain full access. Why waste $15 per month on a subscription plan when for the same money you can have lifetime access to 150 songs a month, and build a growing library of music? Again, Apple has a key differentiator that competitors lack.”

Full article here.

[Thanks to MacDailyNews Reader “James W.” for the heads up.]

17 Comments

  1. Apple will use Lala’s technology to stream the music you already own to any Apple device anywhere. I don’t think it will be used to give you streaming access to any and all music – that would require a monthly subscription. This way you buy the music once and then stream it anytime to anywhere for free.

  2. Just a thought,,,,,

    “”By acquiring Lala, Apple is signaling that it intends to be a major player in the fast growing streaming music sector,” Foremski writes”

    the fast growing streaming music sector..???????? since when. And now that Rhapsody has an iPhone app, I just have to wonder.

    I have to seriously question the author…

    Just a thought.
    en

  3. @Cubert: “Apple will use Lala’s technology to stream the music you already own to any Apple device anywhere.”

    They didn’t need to buy an $80M company to do that. Does Lala own some IP Apple wants?

  4. I think this is short sighted view. I bet Apple will not use Lala’s business model at all. Instead it will use the technology behind Lala in a new and totally unexpected way. They did not purchase Lala on a whim. They needed that type of expertise to further develop MobileMe is my bet.

  5. Just me being the fanboy here, but I think we all know the truth: When Apple reveals what they are actually going to do with Lala we’ll all wet ourselves and proclaim the concept as genius, revolutionary and something we can’t believe we lived all these long years without.

    Hey, somebody had to say it.

  6. So far Apple’s pay rate to the artists has been the most generous of all the download sites. Speaking as a hopeful artist, if the LaLa connection turns out to be merely a way of providing easier access to music that has already been bought and paid for, then I would have no problem with it. But if it turns out that Rhapsody et alia’s shortchanging of the musician is forcing Apple to follow suit, that would be very bad for us.

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