Apple obviously wasn't interested in Lala's users, and I don't expect they were interested in code, so was it a talent acquisition or did Apple just do this to remove a competitor to future online music services?
Regardless of the merits of Lala's service, I highly doubt that the biggest music retailer in the U.S. had a reason to be afraid of any competition from them. Certainly not reason enough to be forced to buy them. Apple are infamously frugal when it comes to M&A, so this must be either "buying technology" or "buying talent". I guess we'll see which once the iTunes "cloud" service is launched.
When Apple bought Lala they did more than remove a future competitor. They removed a platform from the board that was making Flash (Lala used a flash interface) a relevant technology for some users. The also removed Google's best music search partner from the board. Both of the previous were potential channels where Apple could lose sales.
This is just tinfoil hat speculation, I don't have anything to back it up. However, this is the way that high level, powerful executives and a certain class of start-up founder think about markets.
>They removed a platform from the board that was making Flash (Lala used a flash interface) a relevant technology for some users.
That is a little out there, isn't it? It would be like buying a small company because their servers used GNU/Linux instead of OS X. If they were targeting places that made Flash "a relevant technology for some users," wouldn't they target Pandora, Farmville, graphic design schools that teach freshman Flash, etc?
Oh, I acknowledge it's out there (ergo the tinfoil hat comment). However, to your specific examples: Pandora already agreed/decided to build an iPad/iPhone application, Zynga (creators of Farmville are in a financial position to turn down Apple's overtures, plus Zynga's business model/content is a bit of a poison pill. Going after graphic design schools would be political suicide, so it's off the table.
There was at least one report (I think it was here on HN) that said Apple had planned to have a replacement service up by now, but they ran into trouble negotiating licenses. The report said that Lala's licenses were not transferrable on an acquisition.
Non-transferrable licenses are quite believable, if the record companies considered Lala an experiment to test the waters. They'd put safeguards in to make sure that the licenses didn't end up at some place like Apple, so they (the record companies) can decide the pace of growth of this kind of service.
Note that if you check the date of the acquisition, and the date of the close of the service, it's something very close to six months, which sounds like the kind of grace period that would be plausible to allow for shut down of the non-transferable licenses.
What the world needs is a giant repository of all music (legal, of course) and accessible by an API for streams and downloads.
Any access to the API would charge for the rights to play the song, of course, but it would be up to the retailer to decide how the song was paid for, whether it be web-song stream rights, subscription, download sales, ads etc. This would open up a whole new market for music sites without having to directly manage deals with music publishers - we the web entrepreneurs could focus on creative delivery instead of fearing / bargaining with labels.
This is a ludicrous pipe dream, obviously, based on how technologically frightened and fractured the music industry is today. But it would make the world a better place I think.
Remember, the music industry doesn't want you to buy their music. They want to "deal" with you.
An example of a company that wants you to buy their stuff is Amazon. Click a button, make an API call, and you have a new server. That's because they are the ones providing value; they are not the middlemen worrying about being cut out of the loop.
The music industry is different -- they don't do much more than act as a loanshark to the artists, which the artists put up with because the only way to have your music advertised is with the record labels. If there was just an API where you could sell your stuff, then the record labels wouldn't be necessary. Your laptop, a good soundcard, and free software is all you'd need to "play in the majors". That's not good for the middleman.
Sounds a little bit like what Spotify does. OK they don't have all music, but it does have a fair amount. They also have a cross platform API (http://developer.spotify.com/en/libspotify/overview/), and while I don't think you can use the API exactly as you like, I'm sure if you had a good idea they'd be willing to listen. It's not quite your pipe dream, but it isn't too far off.
Lala's streaming catalog was huge (>8 million songs) and included music not available on iTunes. I enjoyed using the service and have since lost any infatuation with downloading and storing MP3s. Being able to listen to anything once was great but the day has already come where you'll be able to rent access (cheaply) to an entire collection and listen to what you want, when you want (e.g., mog.com). Still to come: better tools for organizing the music you're interested in, learning about artists, and finding new music.
While Lala, Placebase and Quattro are notable because they fit in the Google space, the quantity of acquisitions suggests to me Apple is still deliberate about their purchasing -- and a defensive move is not a good enough reason.
Lala's purpose at Apple is specific and grand; it provides another something to enrich our world and their ecosystem. I have little doubt.
"Credit amounts will be based on your account activity as of May 31, 2010. iTunes Store credit amounts will be rounded up to the nearest $1 for refunds under $10, or to the nearest $5 for refunds greater than $10."
Pardon my ignorance, I'm neither Lala or iTunes' user, is this rounding thing is common?
They weren't that great anyways, you had to pay for listening after the first time. This is fine with me, but think about all the teenagers out there, I am sure they have found other ways to access music given their practically zero income. Once I talked to my 14 year old niece, and she told me none of her friends use limewire or similars, they use myspace and youtube downloaders.
I think that the effort from Apple to shut down paid competitors may not be the solution to their root cause...
>One person with knowledge of the deal, but who was not authorized to discuss it, said that the negotiations originated when Lala executives concluded that their prospects for turning a profit in the short term were dim and initiated discussions with Eddy Cue, Apple’s vice president in charge of iTunes.
Lala started at least five years ago. They received $35 million in venture capital. They were bought by Apple for $17 million. They had $14 million in cash. The effective price was $3 million. They were burning through $500,000 a month. I think it's pretty safe to say that now a team has explored this dark cave and found a gigantic killer bear, no one else will be stupid enough to follow. If they do, I don't know if they'll find too many VCs who want to throw away their money.
I have to think that it is a pretty big PITA (and cost) to get the proper licenses to sell a library as large as the one Lala had online.
That said, I would love it if someone did step up. I have looked at a few similar services, but haven't found any that make for an adequate replacement.
I actually prefer mog.com. It doesn't have all the same social networking features, but those weren't the draw for me anyway. It's certainly a much better bargain.
Edit: spelling