Interview: Lala co-founder Bill Nguyen on Google and the future of music

In the UK, streaming music is all about Spotify, but across the pond, Lala is top of the online pops. It has a massive song catalogue spanning all the major labels and thousands of indies, all available for instant, free online streaming. You can listen to any tune once for free, or buy unlimited access to a song for 10 cents (about 6p). But here's the clever bit: upload your music collection to Lala (it takes just a few minutes to match tunes with its database) and you can stream any of your tracks at any time to any device, without paying a penny.

Lala has been in the news recently thanks to new partnerships with two Web goliaths. First, Lala muscled its way on to Facebook, so your American friends can now buy each other virtual tunes for their real birthdays. Then, just last week, Lala secured itself a spot on the home page of Google.com as part of its new OneBox music-search feature. We hummed a few choruses at Lala's co-founder, serial entrepreneur Bill Nguyen, to see whether he'd sing along.

Do you remember the first time?

"We didn't start Lala to be a music store. We think this is, without question, the best period for music fans. In the past, the cost of going into the studio was so high, the labels were the gatekeepers of the studios. Even if you had an idea and a song, you didn't have any way of getting people to listen to it.

"Now you have the Web and software like Pro Tools, there's so much music being made. We think it's part of our mission to expose people to all of this content. We want people to experience all of the great stuff that's available."

Would you like to teach the world to sing?

"We just passed a million subscribers for the service, but over 15m users access our streaming music on the Web. We're kind of a platform, as we plug into different places, like Pitchfork and Billboard. Now, with Facebook and Google, the numbers are going to be significantly bigger.

"The remarkable thing that we're realising is that consumers today are heavily driven by finding new music, beyond the stuff they have on their CD and MP3s. When we created the locker service [whereby users can access their own songs from the cloud], we thought that 100 per cent of people would use it, but only about 20 per cent have signed up. Instead, many people are using Lala to discover new music and for its social features, which obviously led to the deal with Facebook.

"The lockers are important because it really helps us learn about our customers and recommend music to them. We'll keep doing things to get that percentage up higher."

Why can't we be friends?

"As compelling and exciting as Lala is, there's so much 'free' music on the Web today. The Facebook deal significantly changes our business model and what we're trying to achieve. Millions of people are already sending virtual gifts on Facebook. Now to be able to provide a very tangible item like music is compelling.

"We think it's the most significant new product since the ringtone because now I'm giving someone something based on an event and not just because I want to consume it myself. When the person receives it, it's not just another song, it's a song given by your friend for a gig or a birthday or a celebration or a special event. There's a social aspect to it as well. When you give someone a gift, it shows up on their feed and, hopefully, their friends will feel like they should give something as well.

"One of the things that's really neat about the Facebook experience is that, in addition to the music, they're putting wonderful packaging around the content."

Is it all about money, money, money?

"We're really happy with the economic relationship with Facebook. [No money is changing hands in the Google deal.] We think it will dramatically improve our business, by more than a couple of hundred per cent. With Lala right now, you're having to trust this completely unknown company with your credit-card information. We are getting people to sign up, but it's another trust relationship we're having to build. What's great about Facebook is that we're leveraging a relationship they already have -- people may be purchasing games or virtual gifts.

"We really believe that partnerships are the right way to do it. You want people to take advantage of all the social context they already have on the Web, whether that's pictures on Flickr, or Facebook or whatever. We really want people to add music to all kinds of things -- to share with one another."

Is Lala high-fidelity or the sound of silence?

"Our streaming quality is about 128kbps, with a couple of things at 192kbps. We have smart, adaptive technology that knows what type of connection you have, so, if you have a poor connection, we might stream at a slower rate than 128kbps. But, if someone buys an MP3 download or gives it as a gift, that runs at 256kbps. Where someone might play a song on a more sophisticated system or a stereo, we want to deliver the highest-quality file that we can get a licence to."

"One of the cool things about our lockers is that you can upload a low-quality track and get back a higher-quality stream. If you think about the Web as a music platform, it's the last file format you'll ever need. As bandwidth increases, we can start upgrading everyone's bit rate. We hope to be doing this every year. And, once we can deliver that on a mobile platform, it gets really exciting. You can play on your PC without any special software, and on your mobile device without worrying about syncing."

Tell us about the hand jive

"Unquestionably, the future is on the mobile platform. A lot of people have tried the concept of unlimited music -- Rhapsody has been doing it for years and has now delivered it to the iPhone -- but I think that it misses a fundamental opportunity. Consumers really don't care about 8.5m songs -- they really want to discover new music. A mobile app that just has 8.5m songs is not very compelling, nor is it used very often.

"What we want to do on mobile is very different. We're saying: 'Take the Facebook experience of discovering and sharing new music, and then put that on a mobile platform, where you can keep music without worrying about subscription fees.'

"We're hopefully going to launch our iPhone app very soon. It doesn't have any subscription fees, and doesn't make you pay for things again and again. As with our Web service, you can buy songs for as little as 10 cents. We're just fixing up a couple of bugs and then it'll go to Apple to approve it. We hope that we're less than a month away from this new experience for our customers."

You and whose army?

"In the online music business, it's still the Wild West out there, with MySpace, imeem and Spotify to name just a few. I think that what really differentiates Lala from other companies is that all of them have focused on advertising or subscription as their business models. We took this Web-based technology and applied it to a model that everyone loves -- the iTunes model of 'buy as you need'."

Will video kill the radio star?

"Our technology was always built as a multimedia platform. It was always intended to let people do more than just audio. But music files are really small compared to video files. They're easy to consume and, in a world where not everyone is going to be able to get 720p video, they still offer the best experience. We've also got a lot to learn about how people interact with media in social way. Do they give it to each other? Do they watch what other people are watching and then watch that? Do they actually recommend things to one another? This will take more than a couple of quarters to get down."

What's in your crystal ball?

"We're now up to 9m songs, which is already one of the largest catalogues on Earth, and we're continually adding more content. We now want to be part of the global music scene. We already have an amazing catalogue of French music, amazing indie rock from England -- all kinds of stuff we've been aggregating in.

"We're a US-only service at the moment, but we're also working very actively to secure the licences for Europe, specifically the UK, France, Germany and Spain. The challenge is that every country has a different rights-management society and it just takes time to accrue those rights."