06-13-2007, 02:00 PM
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Editor Emeritus
Join Date: Aug 2006
Posts: 2,968
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Lala.com in Trouble? Offers Music Storage and Streaming for Free
"Lala.com started out as a CD-swapping service, acting as an exchange point by which music fans could swap CDs via regular mail for $1 apiece. Now, Lala is re-inventing its music model, offering to let users upload their entire music libraries to Lala, then stream those songs anywhere once a user logs into their Lala account—and users can even fill up their iPods directly from the site without having their iTunes library on hand. The service is available now in beta form. And, perhaps more significantly, Lala is offering members ad-free, streaming versions of music from Warner Music Group, for free, with no strings attached, and says it's in talks with other labels. Users can stream all the music they want, for free, and Lala will pay the labels for it, no strings attached, Folks who like that they hear can buy tracks for $.99."
Very interesting business model. Lala.com will be taking up to $140 million in losses in paying music companies fees on behalf of their users, so that users can listen to tracks for free. I am a bit worried for them because their business model assumes that people will want to sample the music on their desktops but will want to subsequently buy the music to carry around on their iPod. I find two problems with this -- 1) they allow users to listen to all the music on their site which means their source of cash is limited to those customers that will want to listen to that same music on their portable music devices; and 2) they will charge the same $.99 per track that all other providers are. I just don't understand know how they will make up their losses.
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