Money

In our monopolistic world of online music, it seems bound to happen every time: just as another consumer-friendly strategy begins to take root, that strategy gets swallowed into oblivion through an acquisition. Such may be the confounding case of the little-known music retailer Lala, a company whose strategies and efforts I’ve long been a fan of personally. Apple, the New York Times reported on Friday, has agreed to purchase online music retailer Lala in what some analysts will see as a game-changing strategy on the part of Apple.

Lala was a company that originally started as a used CD swapping and resale opportunity, remaining somewhat under the consumer radar the past few years while consistently garnering dramatic attention from technology and music industry insiders. Though under-appreciated, Lala changed its focus and technology to produce a new identity for themselves.

But in 2007, the company engineered synergistic breakthroughs in personal digital music library storage and delivery, managing to create and implement a business model which could give previously unforeseen freedom to consumers amidst a climate of fear in the music industry.

Driven by their energetic and enthusiastic CEO, Bill Nguyen, Lala’s model for success couldn’t have been more simple or fair: charge people less money for DRM-free, high-quality MP3’s while allowing them to, at the same time, store and stream their complete digital music collections from any web-enabled device, smartphone or PC — digital music without borders.

As Lala’s technology strengthened and their business model began to take shape, they opened the technology even further, launching services at the end of 2008 allowing consumers to create streaming playlists like the one above (either from consumer’s individual collections or from Lala’s extensive library of music) which could be embedded on websites and social networks. Recent deals with Facebook and Google to deliver content easily to consumers instantly opened up new avenues of revenue which would, at a base level, drive up the company’s potential value in the marketplace.

So, why the sale? The feel-good marketing strategies and open border policies of Lala haven’t really had time to demonstrate their projected growth and scalability because, unlike Apple, nobody except those in-the-know have been aware of Lala or the technology behind their brand. When a name like Apple jumps into the mix, people quickly take notice because, after all, it’s a brand people have grown to trust.

But on the other side of things, there are Lala’s extensive music licensing agreements with both major and independent music labels which would likely dissolve as a result of this deal — licensing agreements which are non-transferrable in the sale of the company.

There’s also a school of thought that Apple is buying much more than the brand of Lala — they’re buying the technology that Lala’s developers built in order to extend their reach into the next generation of PC and smartphone streaming technology.

The fear I have for consumers is the death of that incredibly-alluring deal that you might have been lucky enough to discover from time to time when you clicked on one of those friendly-little Lala players you’ve started to see: “Add this song to your collection for 6 cents”. It’s too early to tell what Apple or Lala have in mind yet because, clearly, nobody’s talking yet and there’s no crystal ball that would have even predicted this acquisition on the part of Apple.

Perhaps, in the end, the message Apple will see itself delivering to consumers is that the cost of doing business outweighs the best intentions of the little guy. If that is case, and I hope it isn’t, we’ll have to wait a little longer for a company to come along and rewrite history. For now, I hope we can all discover the long-term upside for music consumers in this very important acquisition for Apple.