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Apple buys music startup Lala

on December 08, 2009, 9:05am

There’s no doubt that Apple reigns supreme in the world of music. The fact that they control 70% of all digital music sales is only a small indicator of the brand’s reach. And now that impact has gotten deeper as the media giant has recently purchased music startup Lala.

The deal, which was first rumored late last week and became official on Monday, will give Apple control of one of the Internet’s most popular streaming music business. Founded four years ago and currently based in Palo Alto, California, Lala works by offering a “cloud-based” stream of songs. Users can pay 10 cents for an unlimited stream or pay between 79 and 89 cents to download the song. They can then synch it to their various mobile devices or access it via Lala’s site.

Already, industry experts are plotting the benefits of the potentially monumental deal. Among them is the idea that Apple may have bought the service to further explore the streaming method and to make accessing music easier and less of a hassle. Of course, it may also be Apple’s way of stopping some potentially damaging competition from further growth. As Rolling Stone wrote, “Apple’s deal can also be seen as a response to MySpace Music’s recent acquisition of both Imeem and iLike.”

While Apple spokespersons have claimed the deal is standard and the company routinely purchases smaller tech companies, New York Times tech reporter Brad Stone wrote the deal could be used as a means of obtaining Lala’s engineering crew and innovations.

“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. This person said Apple would primarily be buying Lala’s engineers, including its energetic co-founder Bill Nguyen, and their experience with cloud-based music services.”

But it’s not all fun and games. As TechCrunch writer Jason Kincaid notes, the purchase could in fact mean the end of a working relationship between the champions of digital media and the often prehistoric record labels:

“This could be bad news for Lala users. It’s unlikely that the innovative deals negotiated by Lala will survive through the acquisition. For over a year, Lala users have been purchasing the rights to stream their music an unlimited number of times for ten cents per song. If the deals with the music labels go up in smoke, Lala may lose the right to stream those songs. In other words, all the money users have been spending on web songs may go down the drain. If the deals are nullified, hopefully Apple will renegotiate them to at least cover existing purchases until it releases its own streaming music service. We’ve reached out to Lala but have yet to hear back.”

Also, no word on what this means for Lala’s recent deal with Google. Needless to say, there are still a few issues to be sorted out. Thank goodness we are here to update you.

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