Is Lala's DRM a new way to lock up music?

"The system also allows for the 'revoking' of ownership of digital media. For example, if a user is known to have illegally shared a file, the copyright owner may choose to revoke their ownership."

"A network-based DRM system manages digital media assets stored in the network," Lala, which has been praised by music labels and has financial backing from Warner Music Group, states in the document. "The system provides consumers with access to the digital media from any device connected to an electronic network such as the Internet, while enforcing the intended uses by the copyright owners."

"The Web restricted nature of the offering," Lala writes elsewhere in the filing, "means that the digital assets are at all times controlled by the system and thus result in minimal piracy."

The patent application proves Lala is trying to develop a new type of DRM, according to Robertson. Instead of wrapping individual songs in DRM, Lala's plan calls for a network to act as a fortress that surrounds an entire music ecosystem.

Lala CEO Geoff Ralston confirmed that Lala filed for the patent but denied the company is trying to wrest control away from users.

"It's a patent around Web Songs," Ralston said.

Web Songs are one of the cornerstones of the company's latest business model. Lala, which has switched focus from two prior models, now offers three main features. In the first, MP3s unprotected by DRM can be purchased and download for rates comparable to iTunes'. A second option offers users unlimited, ad-free streaming access to music they already own. The way this works is that users allow Lala to scan their hard drives and preserve a list of the songs the person owns. Lala's system will then stream its own copies of the songs to the user. This way users don't have to worry about losing their music to hard-drive meltdowns or misplaced music players.

Lala's last feature allows people to listen to streaming music--that they don't already own--for 10 cents per song. Lala calls these "Web Songs." One of the ways Web Songs are different from MP3s is that they can't be downloaded to a portable device.

"A Web Song by definition has a limited set of rights associated with it," Ralston said. "One right you don't have is the right to take it with you. It's not a portable song. Another right you don't have is to copy it. Everything has limited rights, even an MP3. You're not allowed to take an MP3, copy it, and sell it."

Lala said Web Songs offer people a chance to obtain streaming access to a song for the price of a grocery store gum drop. If customers later want to upgrade and buy an MP3 version of the tune, the dime is counted against the price of the download.

While Ralston said the filing only deals with Web Songs, the patent document itself, under a section titled "Overview of Present Invention," lists the many applications of its invention.

The patent filing indicates that Lala's DRM invention is designed to lock down music that its users already own. Lala's system doesn't allow people to listen to their own music via anything but a Web browser and the songs cannot be downloaded. Ralston argues that people can do all these things with the original music files they own.

But if Lala's users own the music the company stores, why does Lala restrict it this way? Are these restrictions rooted in some technology limitation or do the major labels require them?

"We're trying to provide a way so that users can have more access to their music than they had in the past," Ralston said. "Look at the iPhone. I can't easily throw brand-new graphic cards into it. It's all closed up. But it's a much better consumer proposition. We're not acting as an agent of the record companies in any way except that we resell their goods. There's nothing nefarious there at all. We repackaged some stuff that we think provides a better consumer proposition."

Music sales have been falling for years, and piracy is at least one of the main causes. Nonetheless, the four top record labels over the past year have appeared to give up on DRM as a piracy-busting strategy. This trend culminated in January when Apple announced it would strip DRM from the entire iTunes library. So, why then is Lala attempting to come up with a new DRM strategy?

In the patent application, the company offers some clues.

Lala notes that DRM produced by Microsoft and Apple "suffered from lack of interoperability caused by competitive and licensing issues." Most DRM, Lala points out, can also be cracked or broken. Lala says in the patent filing that its DRM approach avoids these issues.

"A network-based approach protects against rampant piracy," Lala writes. "By delivering the product directly from the network, only authorized users and devices can access the media. Access by users and devices is controlled on the Web and can be constantly adapted to changing technologies and market pressures."

Robertson claims that network DRM is simply the latest attempt by the recording industry to jerk control of music away from consumers. He said what may be most alarming about Lala's system is its potential to snatch away someone's songs.

"The system also allows for the 'revoking' of ownership of digital media," Lala writes in the patent filing. "For example, if a user is known to have illegally shared a file, the copyright owner may choose to revoke their ownership of the digital media in the system, limiting the rights of such user to the media."

When asked about this, Lala's CEO was unapologetic.

"Is it controversial that a store has the right to terminate someone that steals from them?" Ralston asked.