Apple Bought Lala To Shut It Down?

from the can't-have-competition... dept

I've been a pretty harsh critic of Lala over the years. The company was long on hype and short on substance with its ever changing business model. First it was a CD swapping service. Then it was a free streaming music service. Then it was an iTunes-in-the-cloud. Still, the final product was decent, and with a bit of work could take on Spotify in the market. When Apple swooped in and bought Lala late last year, many people got excited over the possibility of Apple creating its own streaming music service that really could be seamless.

Instead, it looks like Apple bought Lala to shut it down. Just five months or so after purchasing it, Apple has announced that Lala will be closing at the end of May, pissing off lots of users. Now, it's entirely possible (or even likely) that Apple is timing the shutdown with a launch of a totally new streaming iTunes-in-the-cloud type service, but it does seem weird to buy a company and shut it down so quickly, and raises questions of whether or not the purchase was really about building out Apple's offerings, or about shutting down a nascent competitor just before Apple launched its own version. Also, if the plan is to launch its own version, why "shut down" Lala? Why not just transfer them over to the new service?

In the meantime, Spotify still hasn't launched in the US, but you would think that now might be a good time to step in and sign up disgruntled Lala listeners -- before Apple really enters the market...


Reader Comments (rss)

(Flattened / Threaded)

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    Tech Lawyer, Apr 30th, 2010 @ 4:48pm

    Yes, this is not an uncommon practice in the technology industries. There is a need for the established players to take out any hint of competition before they get big enough to rival their business. Google has bought a virtually endless string of businesses because of thie, not least of which being youtube.

     

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      ChurchHatesTucker (profile), Apr 30th, 2010 @ 5:36pm

      Re:

      "There is a need for the established players to take out any hint of competition before they get big enough to rival their business."

      More often, they want the expertise that resides in the company, but not the actual product. C.f., Apple's purchase of that chip designing shop, which was folded into their A4 team.

       

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      Big Al, May 1st, 2010 @ 7:16am

      Re:

      "Google has bought a virtually endless string of businesses because of thie, not least of which being youtube."
      I don't remember YouTube being shut down...

       

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    Cynyr (profile), Apr 30th, 2010 @ 5:14pm

    I saw mention that balances would be converted to iTunes dollars in the slashdot article. So I would hope that apple moves LaLa users to the yet to be announced and the first time i've heard of it streaming service.

     

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    Aaron (profile), Apr 30th, 2010 @ 5:42pm

    It could be that if Apple transfered the users over to the new service (if it exists) they would have to grandfather them into the program with the same rates for some time. Given that iTunes has millions upon millions of users already, Apple does not need to migrate people over to keep the user base. This appears to have been a pure technology play for Apple.

    Another point to consider is the accounting system that runs iTunes. From what I have heard the system is difficult, at best, to make changes to. Again, I heard this second hand, but supposedly this is the reason that when in app purchase first launched you could not have in app purchases in Free apps. Once they corrected that bit in the accounting system, they launched it in the iPhone OS SDK.

    With that in mind, perhaps moving LaLa users into the new system may have proven to be a daunting task. Why bother with the daunting when you can rebuild your user base, with ease from scratch, using your existing sales channels?

     

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    Anonymous Coward, Apr 30th, 2010 @ 6:00pm

    This is the best ever!

     

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    Jason Sykes, Apr 30th, 2010 @ 6:18pm

    I really liked Lala

    I had about 20 bux in web songs. This exchange for "itunes credit" is a slap in the face!

    I would never ever give money to Apple for anything!

    so pissed!

     

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    RW, Apr 30th, 2010 @ 6:28pm

    Purchasing Intellectual Property

    They probably bought the company to get their tech, redesign it, add more DRM, and then use it for their own fruity purposes.

     

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    McBeese, Apr 30th, 2010 @ 9:56pm

    I don't understand your assumption...

    My assumption is that Apple is integrating Lala with iTunes and will relaunch when ready. It's kind of like when a new owner buys a bar and closes it to redecorate before opening under a new name.

    If this pisses of some of the current Lala users like Jason Sykes who had invested a measly $20, why would Apple care? The Lala user base is a gnat on the ass of the iTunes user base. Apple didn't buy Lala for the community, it bought Lala for the technology and for the talent, in my opinion. It's much more important for Apple to add new value to the iTunes user base than to worry about the Lala user base.

    I don't understand commenters like RW who are foaming at the mouth with Apple hate. Apple fought the labels to get rid of DRM - and was successful - yet RW thinks this is a plot to add DRM? Some people just don't pay attention.

     

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      Christopher Weigel (profile), Apr 30th, 2010 @ 11:24pm

      Re: I don't understand your assumption...

      Wait... Apple "fought the labels"? Bullshit.

      Apple only reduced their DRM scheme when they ran into competition.

      So much for any respect for anything else you said. Especially since your analogy is COMPLETELY WRONG.

      You close a bar because you only have one, and want to provide a good customer experience. There's no scarcity online, there was no reason to shut it down. Certainly not to "remodel".

      Further, just because you're an asshole to a "gnat on the ass", doesn't mean you're not an asshole.

       

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        McBeese, May 1st, 2010 @ 6:31am

        Re: Re: I don't understand your assumption...

        "Wait... Apple "fought the labels"? Bullshit.

        Apple only reduced their DRM scheme when they ran into competition."


        The labels insisted on DRM. Apple gave up the uniform $0.99 price in favor of variable pricing in order to secure the rights to sell non-DRM content. Apple sells more content without DRM and Apple likes to make money.

        "So much for any respect for anything else you said. Especially since your analogy is COMPLETELY WRONG.

        You close a bar because you only have one, and want to provide a good customer experience. There's no scarcity online, there was no reason to shut it down. Certainly not to "remodel"."


        Last time I looked, there was only one Lala service online and it was the only streaming service that Apple owned, so the analogy works. Scarcity has nothing to do with this. It's about integration and re-branding, which is a lot like the online equivalent of remodeling.

        "Further, just because you're an asshole to a "gnat on the ass", doesn't mean you're not an asshole."

        You may not know very much about anything, but at least you're self-aware.

         

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    Brooks (profile), May 1st, 2010 @ 12:11am

    Just wow.

    Ok, done with Techdirt.

    Mike, you used to be so insightful. You talked about economics and strategy, and marginal costs and the implications of non-scarce goods.

    Now, it's all anti-this and anti-that, and tinfoil-hat-this and conspiracy-that.

    And now, you've got Apple buying a locker/streaming service, spending billions to build out data centers, and shutting down the retail operations of the streaming service... and the best you can come up with is that a multi-billion dollar company bought an unprofitable startup solely to shut them down?

    Ouch. Apple might have bought Lala for talent, and perhaps for technology or patents, and *maybe* as a precursor to a streaming version of iTunes. This "bought them to shut them down" is about as intelligent and insightful as the old "GM has secret engines that get 1000mpg, but they don't release them so they can profit from the oil cartels!" crap.

    Maybe Techdirt's heyday was a fluke, or maybe I was too busy and tired to notice this level of nonsensical thinking. Dunno. I'll miss the increasingly-rare economic analysis, but the world really only needs one Consumerist.com. Best of luck to you.

     

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    Jason, May 1st, 2010 @ 6:36am

    " and the best you can come up with is that a multi-billion dollar company bought an unprofitable startup solely to shut them down?"

    if they got me the pirate to pay for music are they really unprofitable?

    you must not be familiar with lala

     

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    Paul, May 3rd, 2010 @ 9:53am

    CD Credits

    Where did my 10 credits for CD Swaps go?

     

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      Vanessa, Oct 20th, 2010 @ 8:02am

      Re: CD Credits

      holy shit that's what i'd like to know. according to apple we should be getting credit to our itunes account. this was stated in may...

       

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    ashley w, May 5th, 2010 @ 8:38am

    wtf

    wtf y dont u makde another name like tada.com or etc we aqll want lala to stay lets just vote

     

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    ashley w, May 5th, 2010 @ 8:38am

    wtf

    wtf y dont u makde another name like tada.com or etc we aqll want lala to stay lets just vote

     

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    kamm, May 8th, 2010 @ 11:08am

    Too bad Apple, as always, is a lying sack of shit - they claim you get credits for your web songs but when I generate my credit report I get NOTHING despite my ~50+ web songs. Fuckin' scumbags, lead by the greedy, crooked , completely immoral turtlenecked freak, as always. OTOH while his cancer just made him even bitter and more evil his time will be soon up, he knows it.

     

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