Everything Old Is New Again... Again

from the haven't-we-seen-this-before? dept

Is there some sort of rule that when discussing "new" dot com companies, the press is supposed to ignore the fact that they're nearly exact replicas of companies that were around during the first internet bubble? Or, even worse, are perfect replicas of companies already around? The latest is about a company called LaLa that is apparently positioning itself as a way to get "nearly free music." The specifics, however, show that this looks quite similar to plenty of other business models -- most of which didn't work. But that doesn't stop the press from writing glowing stories on the company that ignore both the inherent problems in the model as well as those who have gone before it. In this case, the company is simply a swapmeet. It lets users list CDs they own which they can then trade with other users for a $1 per trade for each CD received (and, you can only get CDs if you also give out CDs). This isn't a new idea by any stretch of the imagination. During the bubble years there were a bunch of online swap sites, and they all pretty much disappeared. However, if this company sounds familiar, that's because its model is identical to Peerflix, a company that launched last year -- except for DVDs instead of CDs. As we pointed out last year, there's a fundamental problem with the Peerflix model: people want to keep the good DVDs they have, while they're willing to trade the bad ones. In other words, markets like this get filled up with bad-to-mediocre content, rather than anything worthwhile. Also, while the article talks about "nearly free music" that's extremely misleading. First of all, you have to offer up your own CDs, which you paid for at some point (in most cases). Finally, while the article also notes that this is "legal," it leaves out the fact that if you trade your CDs while keeping ripped copies of the song, then you're no longer in such good legal shape. And, of course, given the recording industry's historic view towards any such activities, it seems unlikely that they'll look kindly on this offering.
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  1. icon
    Mike (profile), 7 Mar 2006 @ 10:04pm

    Re: grt debate - fr. founder of 'la la'

    Bill,

    Thanks for coming here and responding to some of the points. However, I'm a bit confused by some of the statements.


    'la la' was created so we'd all have more choices in music. There are 3m CD titles, less than 150k are available on iTunes and digital music services. The use of CDs is to help us access the full catalog.


    That sounds good in theory, but breaks down when you think about it. Using iTunes as your base is wrong. You need to use other sites that sell CDs... and these days you can really find just about any CD online, whether new or used. And, if someone has a used CD that isn't findable, why will they use your service rather than something like eBay?

    Every CD that you trade on 'la la' results in 20% going back to the artists. No other site online or used record store does this. Instead, they choose to rip-off artists for their work. It's not cool and it's definitely not right.

    This seems like a nice gesture, but doesn't make any sense. The artist already made their money from the sale of that CD. They no longer have any claim to it. That's the basis of the right of first sale. Are you really suggesting that it's "not cool" and "definitely not right" to sell a CD that you bought without then paying the artist as well? That goes against the entire concept of the right of first sale. Why should the artist get paid twice?


    If you think we're going to fail, I've got six other start-ups in my history (3 IPOs, 3 M&As, and another going strong) that says 'la la' is going to make.


    No argument there. You've obviously done a great job in the past and have a ton of experience. However, I'm still not convinced of the business model. I'm also not convinced that past successes necessarily mean future successes. I've seen too many successful entrepreneurs fail in later attempts to believe it means much of anything.

    Don't over analyze the business model - I didn't. I started 'la la' because I hate buying music from Wal-Mart and I wanted to help artists.

    I guess this is the statement that confuses me most of all. Why shouldn't we analyze the business model? And why didn't you?

    Also, what does Wal-Mart have to do with this? It doesn't seem like you're competing with Wal-Mart at all, but used record stores. Also, it's still not clear that this really helps artists very much either.

    Finally, considering that many people feel that CDs and albums are a dying breed, it seems odd to try to start a business focused on them.

    I wish you the best of luck, and hope that you'll prove me wrong. However, as of right now, I just don't see how this works long term.

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