The deal terms were not disclosed, but the acquisition may well be an example of the old phrase, “If you can’t beat ’em, then buy ’em.”
When Lala launched in 2006, the Palo Alto, Calif.-based company primarily operated as an online trading service, allowing members to swap CDs. Investors, including Bain Capital Ventures, Ignition Partners and Warner Music, pumped about $15 million into the company over two rounds in 2006 and 2007, according to Thomson Reuters data.
I quickly hopped on board. I didn’t much care for Lala’s social networking features, but I joined the service, traded CDs and expanded my collection. I quickly realized something: physical CDs are so 1990s. I don’t walk around with a pack of discs. I’ve got my iPods, and I can’t recall the last time I bought a CD.
Lala caught on to the same trend and began offering cloud-based music services. The site has been pushing digital music in which Lala users can purchase the rights to stream their music from any computer an unlimited number of times for 10 cents per song. Or they can buy the MP3s for 79 cents.
Early Friday, Lala told its members that it discontinued its CD trading services altogether and suggested users go use SwapTree. Shortly after that announcement from Lala, the Apple acquisition rumors began to swirl.
I’m not sure how Lala’s digital music service affected Apple’s bottom line. Apple’s iTunes, which sells single songs for as low as 99 cents, is the leading music service nationwide, responsible for more than 70% all digital music sales.
Unfortunately, I’ve read interesting chatter online today about the deal that suggests Apple bought Lala to get rid of it, not to necessarily absorb the technology. After all, the act of downloading music is giving way to the streaming features that Pandora provides. Plus, Lala’s licenses agreement with music labels may allow for streaming music, but supposedly the agreement is not transferable to any acquirer. So, my fellow Lala users, it’ll be interesting to see if those streaming rights you bought from Lala remain valid.