Lala purchase may hint at the coming of the rumored iTunes Replay service

Posted by Dennis Sellers Dec 8, 2009 at 7:00am

As you’ve doubtless heard by now Apple has officially bought Lala (purportedly for US$80 million, less what half of what investors valued the company at in 2008), which, last September, unveiled “the first and only free fully licensed service to instantly provide anywhere web access to an existing music library such as iTunes.” Which begs the question: what is Apple going to do with it?




The company’s goal is probably to allow Apple to implement a new iTunes feature that would allow users to stream their purchased media content remotely. In fact, rumors of such a service surfaced earlier this year.

Purportedly, the service would allow iTunes shoppers to build up a digital video collection (music, movies, TV shows, etc.) without having to worry about the intensive storage space involved. iTunes Replay would, per the rumors, stream music, TV shows and movies purchased on iTunes, so you wouldn’t have to download them after purchasing, freeing up hard drive space.

“One of the main complaints users have with video purchases on iTunes is that they are forced to either throw away their files after watching them, or find a place to store the large files either on their hard drive or by burning them to DVDs,” notes AppleInsider. “By storing their video content for them and allowing users to stream it for viewing as often as they want, Apple would essentially be offering a media center alternative.”

Currently, the iTunes media player doesn’t let you stream complete songs, just 30-second snippets. Lala technology could change this. And, as noted by
PC World, Apple’s Genius feature, which uses your existing library to recommend new tracks, would be more useful if you could actually listen to all the suggestions.

PC World also thinks that Apple will integrate Lala’s social features into iTunes (which makes sense) and release an app (as well as an iPhone/iPod touch version) that would “let you stream tracks forever at a rate of 10 cents per song.” The latter I’m not sure about. The streaming songs say in an online “locker,” but are accessible via any device with a browser and Internet connection. This raises the possibility of Apple losing revenue if some folks stop purchasing downloads and rely totally on streaming instead. On the other hand, maybe most folks are like me and want to purchase and “own” music, movies and videos, whether the purchases are physical or digital.

Apple care specialist and president of Boston-based Tech Superpowers Michael Oh tells eWeek that he thinks Apple is certainly planning on capitalizing on the music streaming market, “the only type of digital music service that has been able to gain traction, either through subscription-based or ad-supported models.”

No matter how large a playlist may be, people will continue to want to hear, and share, new music, Oh argues, and being able to chose your own tracks is essential to the market uptake for streaming. “Once people have the ability to choose their tracks, then they don’t seem to care whether they offer that music or not,” he tells eWeek. However, Oh notes that the other piece element of digital streaming success stories is the ability to lure customers into buying that music once they’ve streamed it. “It is quite interesting how there’s a direct tie between new music that you like and still wanting it mobile, so you’ll actually end up downloading it,” he says.

If he’s right, I think Apple will go the subscription route and not the ad-supported streaming route. The latter hasn’t proved to be terribly successful, as far as I can tell; look at the death of SpiralFrog and Ruckus.

paidContent is probably onto something when it notes that Apple almost certainly won’t launch a radical new web-based streamer or locker distinct from the core iTunes brand. The site says that, more likely, we can expect such features as: integrating remote music access with the MobileMe suite that now offers web-based mail, calendar, contacts, photos, gallery and backup but no songs (where music goes in iTunes, expect remotely accessed movies and TV to follow).

On the other hand, Ars Technica thinks Apple acquired Lala for the talent, not technology to launch a music streaming service any time soon. The site says that the company offers no technology that Apple needs to purchase, and comes with licensing issues. Besides, Lala never turned a profit.

“So, it’s difficult to see anything tangible that the acquisition provides Apple,” writes Ars Technica. “The alternative take, one that a different unnamed source fed to The New York Times, is that this acquisition follows the PA Semi model. In that case, Apple bought a fabless PowerPC design firm, but not with the intention of actually using any of its existing products; instead, all indications are that it simply wanted access to the engineering talent, which it’s now deploying to provide improved ARM chip designs for future portable devices. On balance, the purchase appears to give Apple the chance to bring in engineers that will be useful now, and could be even more so if it chooses to enter streaming or subscription services. But, for the moment, there’s nothing about the purchase that seems to provide the company with any key technologies it was missing in terms of diving into markets. Until another company demonstrates that there’s money to be made (or iPods to be sold) through streaming, there’s no reason to think that a move of this sort is immanent.”

My take: after mulling over all the evidence and speculation, I think 2010 will see Apple launch the so-called iTunes Replay. And it will be subscription, not ad, based.

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