In another disappointment for U.S. music fans, Apple announced last week that it would shutter online music service LaLa on May 31st— only months after purchasing the company for over $80 million in December 2009. Started in 2006, the company allows users to create and share music playlists, access music collections from any computer, purchase MP3s, or buy the right to stream songs indefinitely for ten cents. The site gained notable exposure in the music community when taste making blog Pitchfork Media began using LaLa widgets and playlists to accompany it’s music reviews. The announcement leaves room for speculation as to Apple’s motivation and its next move in the music space.
Many predict Apple will use LaLa’s “cloud” technology to launch a music subscription service within the iTunes platform– LaLa, unlike iTunes, stores music on servers which users can access in addition to direct dowloading. In a world of lost iPods and constantly updating technology, that convenience could add substantial value to an already established brand. The Wall Street Journal also reports that Apple will likely start an iTunes.com site this year empowering users to play music without the currently required iTunes software. This would open Apple’s music business to a larger audience and position the company to tap into a growing mobile market. Forrester Research projects that today’s 2.1 million music service subscribes will mushroom to over 5 million by 2014, due in part to an expansion of music streaming on smart phones.
LaLa is also regarded by many as a pawn in the chess match between Google and Apple. in 2008 Google announced a partnership with LaLa for its Google Music feature, which began displaying LaLa previews of songs in search results. Google even attempted to purchase LaLa before being outbid by Apple. With “cloud” computing and mobile as key battle ground for the two online titans, Apple was undoubtedly happy to remove LaLa from Google’s clutches while seizing it’s technology.
Apple’s announcement mirrors Myspace’s December 2009 purchase and immediate closure of Imeem— an ad supported music service and social network with features similar to LaLa. The disappearance of these two services clears room for Apple to get into the music subscription game if it chooses to, but also creates an opening for companies like Spotify— a popular European music subscription service with strong mobile apps, poised to enter the U.S. market. In all likelihood, Apple is mobilizing to beat Spotify to the punch by leveraging it’s influence in the U.S. music market before the competition reaches our shores.
Despite Apple’s notorious secrecy with planning, it’s intentions in the music space should be pretty clear by the end of the year, if not sooner.