Social Machinery

Lala is a very exciting music streaming service. The San Francisco based starlet has been offering “music in the cloud” for the last four years.  Essentially users pay a small amount (roughly ten cents USD) for adding favorite music to their playlist that can be streamed anytime, anywhere without downloading it.

The business model changes storage capacity (downloads) for bandwidth (streaming). Also, the service is absolutely legal due to several agreements with most music labels.

Then, why Apple wants to buy Lala?

Probably there are some synergies between Itunes and Lala business model:

• Apple could offer an additional service to their current download music model in Itunes, by selling only streaming music ( non-downloadable) to their customers. This could help Apple on reducing piracy issues as users cannot download the music and then distribute it in P2P sites.
• “Music in the cloud” will help Apple to get more insights about their customer’s behavior as all your favorite songs will be in “cloud playlist”. Therefore recommendations algorithm can be applied with better accuracy
• This could also be a tactical move from Apple as the market of streaming music becomes more attractive. Consider recent Myspace acquisitions from iMeem and iLike, Apple may consider that full music download business could be challenged in the mid-term.