Imagine a music service that had free full-song previews and unlimited streaming for just $0.10. Instead of having to pay $0.99 or more for a song in iTunes or other music service, you could buy 10 songs at that price and stream them from a music service server. Such is the reality for consumers with startup company Lala. What did Apple do in response to this up-and-comer that threatened its iTunes business? Immediately buy them out to make sure the service never gained steam or integrate the technology into iTunes.
Many in the industry feel that Lala might have been the biggest threat to Apple’s iTunes compared with any of the other music services available. On December 6th, Apple confirmed reports that it had acquired the company, but gave no details on the price it paid or if it would integrate Lala features into iTunes or Apple products. “Apple buys smaller technology companies from time to time and we generally do not comment on our purpose or plans,” an Apple spokeswoman said in an e-mail to PC World.
There are over eight million songs in the Lala library according to its website. The site explains that a single song can be purchased for $0.10, which allows a user to listen to it an unlimited number of times via an internet stream. To purchase the song for download, it will cost just $0.79, which is cheaper than iTunes. Streaming music services have becoming increasingly popular, as both Facebook and Google have deals with Lala to let users stream songs.
So now that Apple has made sure no competition will rise up and threaten its business, what’s the next move for its new asset in Lala? It would seem financially unwise to acquire a company that has a technology that you covet and not integrate it into your existing product line. That would lead us to think that the streaming capability that made Lala so popular will be integrated into iTunes in the near future. Considering that this could even be inserted into the Genius feature to let users get suggestions on songs they don’t have, but could stream in, the potential for additional song sales seems logical.
Another aspect of the acquisition is that it might allow for more music to be purchased within the iTunes library. Right now, there are approximately 10 million titles offered through iTunes and Lala has eight million. Although there is sure to be significant overlap in the libraries, it would represent a significant upgrade.
The one big question to come out of this acquisition from the consumer prospective is if this will lower the price of music on iTunes. Recently, Apple increase the price of single song downloads and, in exchange, offered a better quality song and DRM-free rights usage. Could Apple integrate the $0.10 streaming policy and allow people to stream songs at a reduced rate? Will Apple even keep Lala around or simply shut the service down and integrate the technology into iTunes?
It’ll be interesting to see how this shakes out, as Apple is arguably the most influential shaker in the music business to the direct consumer. As streaming music media systems become more popular, Apple is recognizing it has to stay up to par to continue its market dominance. The acquisition of Lala is a sound one; now, it’s up to Apple to have it make sense in the long run by integrating the technologies and library into iTunes.