The New York Times is reporting that Apple is acquiring Lala, the online digital music streaming service based out of Palo Alto, California.
The value of the deal is still unknown though it is believed that Apple managed to acquire the company at a pretty inexpensive price. Lala Co-founder Bill Nguyen had revealed last month that his company's revenues are less than $10 million and they have close to 100,000 users.
We had written about Lala a few weeks back when Google had partnered with the company in the launch of their online music service. Lala has a catalog of over 8 million songs and the service lets its users stream any song for free the first time. Thereafter users need to purchase the song for 10 cents to be able to stream them multiple times. Lala's unique selling proposition is that the entire music library is in the cloud, making hardware memory redundant.
The acquisition has the potential to change the way iTunes works. We could be moving towards a scenario where the memory space on your iPhone could no longer be a limiting factor to the number of songs and applications you use on the device. Also, syncing files among your various devices becomes a much simpler process when all your information is in the cloud.
However, there are a few challenges that has come in the way that need to be sorted out. Firstly, Lala's partnership with the digital content providers is not transferable to the acquirer. This leaves Apple with only the technology and manpower behind the music service. This being the case, it is unclear what becomes of the "unlimited streaming" of songs available to the existing customers. This also affects other partnerships that Lala has entered into with Google and Facebook.
While Google lets its search engine visitors to stream music from Lala before making a purchase, Facebook allows people to gift digital songs to their friends via the service. In a scenario where Lala ceases to hold the rights to the songs, these partnerships may well fall into trouble. However, it is very likely that Apple renegotiates the agreements with the digital content providers. With iTunes holding close to 70% of the digital music sale market in the US, Apple's clout in the business is pretty huge.
While the future definitely looks exciting, for iPhone users, it may practically however boil down to how well the network carriers are able to offer music streaming to the millions of subscribers. If that does not happen well enough, it will not be long before users get back to the more conventional of storing music on their own gadgets.
Let us know your thoughts in the comments.
[via The New York Times]