New Lala.com may be (too) ahead of its time
The music service, now on its third incarnation, is on to a new business model that could be great...in about five years.
Lala.com is finished helping users swap CDs and no longer is it interested in just being a Web radio station.
Stick with me here because Lala.com's new business model,, is kind of convoluted and that's part of the problem.
The music service--on its third incarnation--is offering a way for consumers to store songs in digital storage lockers and access them from any Web-enabled device. For those of you who have been around a while, this may sound a lot like MP3.com or even MP3tunes.com, companies started by Michael Robertson, the serial tech entrepreneur. (MP3.com is now owned by CNET News publisher CBS Interactive.)
Robertson wanted users to upload copies of their own music into digital lockers. In contrast, Lala has licensed music from the four largest recording companies and a host of indie labels. Once a user downloads the company's software, it will scan the user's hard drive and maintain a copy of their music libraries in the so-called cloud. The beauty of this is it will even make copies of music protected by copy-protection software. The library can then be streamed to any Web-enabled device. Cool, right?
But there's one big obstacle. I still can't access the Web from everywhere. I take San Francisco's Muni train. What happens when I'm underground and don't have Internet access? That means dead air. And above ground, there are still plenty of places that lack Wi-Fi or network coverage.
Internet access will only continue to grow, but it's got a long way to go before it rivals my iPod or any other digital music player. I download a song to my iPhone and it's guaranteed to play regardless of my location. Bill Nguyen, Lala's charismatic cofounder, disagrees. He sees a world dominated by the browser.
"Will you ever (in the future) use an electronic device if it's not connected or doesn't have a browser?" Nguyen asked. "Think iPhone/iTouch/iPod for a moment. They went from $200 for 60GB to $300 for 16GB. What did you get for the 50 percent increase in price and 73 percent drop in storage? We got a wireless connection and a browser.
"PC's are going the same way," Nguyen continued, "with the hottest category being Netbooks that forego fancy hardware and big screens for an affordable price, light weight and a Wifi connection. You've got to face it, there's nothing you don't do in a browser."
The novel way Lala plans to make money is by requiring people to pay for unlimited access to their songs. If a user wishes to listen to an entire song free of charge, he or she can but only once. To have unlimited access to the music in their lockers, users must pay 10 cents a song (Note: the 10-cent charge only applies for streaming music or "Web songs" purchased from Lala). Great price, but it comes with some serious strings. Remember, you can't download these songs. They have to be streamed.
For those people who want to own their music outright, Lala will be happy to sell tracks free of any copy protection software. But so do a lot of other stores, including Amazon.com, Rhapsody, and Walmart.com.
My point is that there are very few problems that this version of Lala solves in a unique way--plenty of companies, including MySpace and iMeem already offer streaming music. (I won't even get into how difficult it likely will be to explain all of this to consumers.)
The biggest selling point Lala offers is that users can claim their music from a range of devices and that means they are not locked into one gadget or any DRM scheme. Where Lala fails--at least for now--is that it can't deliver music where Wi-Fi or network coverage is spotty.
Lala has to hope technology catches up to its business model.