Apple In Lala Land

Do you remember what you were doing when you first heard the rumor about Apple buying Lala.com?

The rumored acquisition generated so many headlines during the first week of December that some news outlets were reporting it as a done deal even though neither company had signed off on the transaction.

Apple eventually confirmed the deal, although a company spokesman wouldn’t talk about how much Apple is paying to become Lala’s new owner.

Lala began life in 2006 as a CD-trading Web site where users would list the discs in their individual collections as well as the CDs they would like to own. Acting as the middleman, Lala would facilitate trades between users and collect a small fee per transaction.

One year later Lala shifted its focus from trading CDs to the “music in the cloud” concept, allowing users to upload their personal collections and have the music streamed from the company’s servers to wherever they may be.

The service also introduced a feature providing free streams of albums to users, but discontinued that particular aspect of the service only weeks after it was launched.

These days, Lala sells MP3 downloads for 89 cents. The service also streams “web songs” for 10 cents a listen.
Lala also offers a service similar to the old MyMp3.com where the company’s Music Mover app scans users’ digital music collections with matches resulting in Lala adding those songs to users’ individual accounts. Keeping with the music-in-the-clouds concept, users can listen to those songs streamed from Lala.com anytime, anywhere.

Lala also figures heavily in Google’s recently announced new music search feature, giving searchers previews of songs before they buy.

Now comes the fun part – Figuring out what Apple will do with Lala.

The most mentioned theory is that Apple is positioning itself for a stab at the music subscription biz. But would Apple need Lala, or any streamer, for creating its own music-in-the-cloud service? It’s hard to believe that the company that created Macs, iPhones and iTunes would need to purchase another company to launch a music-streaming service. But on the other hand, why reinvent the wheel when you can buy a perfectly good one just down the street?

There is also speculation that music streams will eventually put a significant dent in the music downloading industry, and that Apple’s latest acquisition is kind of a hedge for when music consumers trade downloading songs for streaming songs.

“I am sure Apple is watching streaming music, the traction of Pandora, of course, and other streaming applications on the iPhone,” SurveyMonkey chief David Goldberg told the New York Times. “There’s a legitimate question here: Why should people have to download music?”

The Times also reported what Apple is getting in the deal, citing a source close to the deal as saying the acquisition does not cover Lala’s licensing agreements with the four major labels. According to the source, Apple will be getting Lala’s hardware and the techies responsible for the company, including co-founder Bill Nguyen.

The source also said acquisition talks between Apple and Lala began when the latter’s executives realized the company’s chances of turning a profit in the near future were virtually nil.

But now that there’s an Apple in Lala’s future, anything can happen. Especially when it comes to turning a profit – something Apple is very knowledgeable about.

MySpace Music Scoops Up Imeem

MySpace completed its acquisition of music discovery site imeem Dec. 8, and didn’t waste any time letting the world know about it.

Almost immediately after the deal was inked, visitors to imeem were directed to MySpace.com/imeem where the service is now a part of MySpace Music and will be yet another digital property of media mogul Rupert Murdoch’s News Corp empire.

Imeem’s executive staff, including chief executive Dalton Caldwell, chief technology officer Brian berg, chief operating officer Ali Aydar and VP of sales David Wade, will act as consultants during the transition to MySpace. It is not known if they will occupy permanent positions once the service is fully ensconced under the News Corp / MySpace corporate umbrella.

Imeem launched in 2003 and in 2007 became the first music site to obtain licenses from all the major labels for a free, ad-supported music streaming service. Users can stream tracks from imeem’s licensed inventory or upload songs from their own collection to have streamed back to them, anytime, anywhere.

The service was also the first to introduce embeddable music. MySpace and Facebook users quickly made use of imeem’s widget to add music to their own social networking pages.

Playlists make up one of imeem’s core features. By constructing playlists based on the service’s music inventory as well as their personal libraries, users could share their lists with other users, leading to even more music discoveries.

The service also launched mobile apps for Android-based phones and Apple’s iPhone, giving users the ability to stream their personalized imeem libraries to their mobile handsets. However, the acquisition has resulted in the apps becoming inoperable until MySpace can integrate its existing music licenses to cover imeem features.

MySpace acquired imeem and its 16 million-plus user base for less than $1 million, a price tag seen by many as an indication that ad-supported music services have miles to go before becoming highly profitable businesses. Earlier this year Warner Music Group wrote off its entire $16 million investment in imeem and forgave a $4 million debt for royalties in exchange for a minority stake.

Private equity firm Morgenthaler Ventures was imeem’s majority owner, but the equity investors never got their money back.

“MySpace Music and imeem share a common vision and commitment to further enabling the socialization of content across the Web,” blogged MySpace CEO Owen Van Natta. “This deal will allow us to leverage imeem’s industry leading technology and, over time, meaningfully integrate their products into the MySpace Music Experience.”