BUSINESS’s ‘big gamble’ versus iTunes

BUSINESS’s ‘big gamble’ versus iTunes

COLIN CAMPBELL June 25 2007’s ‘big gamble’ versus iTunes


Last week, the online music site launched an ambitious free music streaming service. Within two days, the website was temporarily down as it was barraged with millions of interested customers. Lala may be just another in a long line of online music sites to have come along since Napster, but it has been able to generate a critical buzz that even heavyweights like Microsoft, with all its marketing muscle, haven’t been able to attract.

The appeal of Lala’s plan is that it not only allows users to listen to entire albums for free over the Web (rather than just 30 second samples), but it gives them the option to buy the music and download it directly to an iPod, bypassing their computer’s hard drive, as well as Apple’s software, iTunes.

It’s an audacious plan. No other company has dared crash Apple’s exclusive iPod/iTunes connection, and it’s unlikely that Apple will sit idly by as LaLa moves into its turf. Linking iPod to iTunes to the exclusion of its rivals has been a key to Apple’s success—the iPod holds 75 per cent of the digital music player market, helping Apple sell over one billion songs through its iTunes music store.

So far, Lala has only secured a deal with one major record company, Warner Music Group, but says it’s in talks with others like Sony BMG and Universal. The company estimates getting the music compan ies onside will cost about US $140 million over the next two years, meaning Lala will need “millions of people using and buying on the site to make it viable,” says John Kuch, one of Lala’s 23 employees (the company insists it doesn’t believe in titles). It has also yet to work out any international rights, but service to Canada is coming soon, Kuch adds.

The company has little compunction about discussing the plan and its obvious risks. “This is a big gamble,” says Kuch. But the early excitement over Lala’s Web-based service has at least shown there’s still a healthy appetite for something new in online music, and that the battle for supremacy is far from over. M