Did Apple pay $80 million or $17 million for Lala?

Dramatically different amounts were reported for what Apple paid to acquire the music service. In this tough environment, it's hard to believe Apple would overpay.

Two prominent technology writers are reporting vastly different stories about what Apple paid for music service Lala.

Peter Kafka, from The Wall Street Journal-owned blog All Things Digital, cited anonymous sources in a Monday report who said Apple plunked down $80 million for Lala. In a story published Tuesday, Michael Arrington at TechCrunch cited his own sources who disputed that price and said Lala was acquired for $17 million.

I wish I knew who was right, but my reporting came up with nothing solid. I will say that from the second I heard Kafka's number I was skeptical. After covering the shutterings of Ruckus and Spiralfrog , as well as the sales of Imeem , iLike, and Lala, I can say that the $80 million figure is way out of line with valuations of other companies in this sector.

Lala's service isn't significantly superior to Imeem or iLike, but those companies, according to Arrington, sold for $1 million and $20 million respectively. Lala scanned users' computer hard drives and enabled them to access music libraries stored in the cloud. The benefits of this were complicated and tough to sell to consumers.

I reported on Friday that one reason Apple is interested in Lala is to get its hands on the music service's payment and fulfillment technology, which could save it big money, according to my sources. The company's management and engineering team are well thought of in both music and tech sectors.

Combine all of that and you're still a long way from $80 million.

We still don't have a single profitable player in digital music of any note. The sector is rife with closures and high overhead. There isn't any standalone digital music service, other than iTunes, worth that kind of money.

We might get the truth one day, but don't bet on it. Remember, Apple is in control now and the company distributes information like the Kremlin. One thing we can do is wait to see what Apple does with its Lala assets.

 

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