Apple has acquired Lala, a streaming music service with agreements with the four major music labels EMI, Warner Music, Sony Music and Universal Music. Lala offers the first listen free, and for USD 0.10, users can listen to a track an unlimited number of times. Downloads are also possible, usually for USD 0.79 per track. Lala users can also upload their own MP3s to the site, giving them access wherever they are to music from their hard drive.
No takeover price was disclosed, but earlier this year Warner Music wrote down its USD 20 million investment in the company by USD 11 million. Lala has reportedly raised USD 35 million from investors. This suggests a takeover price of around USD 20 million.
Lala is only active in the US, and its licences can't be transferred to the acquiring party, the New York Times reports. The takeover suggests a strategy shift at Apple for its iTunes service, which to date has focused on downloads. Lala's experience can help add a subscription service as well as streaming to iTunes. Apple already offers the hardware for anytime, anywhere access to music (and video), via the Mac computers and the iPhone.
A while ago Apple rumours suggested the company was preparing a TV streaming service via iTunes, and Disney is working on a similar project under the project name Keychest (see our commentary 'Apple poses threat to cable sector'). The Lala takeover shows Apple strengthening its position further in 'the cloud'. This also would be the next, and according to many marketwatchers, unavoidable step for the music industry away from traditional storage media, such as the CD. However, putting content in the cloud has a number of conditions. First, consumers need to go with the trend. Second, this transition introduces a security problem: what if Apple's servers fail, or if Apple went bankrupt? And last but not least: streaming services have major consequences for infrastructure, from the data centre and backbone to the access network. In short, the 'cloud' is quickly growing in popularity, but there are a few stumbling blocks to overcome.
The cloud is also catching on in the business market, with especially Verizon Business and BT Global services preparing for the new services. T-Systems also just announced a major contract with Philips. This suggests a promising outlook for the new 'storage medium'. If big businesses can set aside their security concerns then consumers should also be able to get used to finding their music and videos no longer on the shelf, but somewhere in the 'cloud'.
