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. “Lala offers streaming for 10 cents per song. This is a complimentary model to Apple’s iTunes store that offers downloads of songs for 99 cents each.”

    I think the word he was after was ‘contradictory’.

  2. well let’s think:

    pros of Lala/Apple cloud streaming:

    1. 10 cents for lifetime (or as long as Apple exists) listening rights to a song – just 10% or less of the cost of an iTunes purchase. your library could be 10x bigger for the same total expenditure!
    2. one free full preview of a song (the iTunes random 30 seconds is almost never enuff).
    3. play anywhere you have web access (and iPhone cell data too?).
    4. don’t need a big storage drive.

    cons of Lala/Apple cloud streaming:

    5. can’t play the song when no web (or iPhone?) access is available. whereas if you buy it from iTunes you can.
    6. can’t burn a CD with the songs. if you buy it from iTunes you can.
    7. can’t use songs as ringtones, imovie soundtracks, etc. if you buy it from iTunes you can.
    8. streaming audio quality not always as good as iTunes purchase quality.
    9. streaming may conflict with other simultaneous LAN activity, causing audio glitches.

    of course you could just buy a few songs you want to burn etc. and stream the rest, and save a lot of money.

    what i don’t get is why the media companies would like this. they just pushed the price of hit songs up to $1.39 this year, and more for albums too. how could they make anywhere near as much money at 10 cents a song? teens aren’t going to buy 14x as many pop star songs.

    it would only maybe make sense if you paid 10 cents for each piece of hardware licensed to stream one song. so then you might pay 30 cents total per song (for a desktop, laptop, iPod combo) – or 50 cents for all 5 computers licensed to one iTunes account?

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