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Lala Innovates with Latest Digital Music Offering October 21, 2008

Posted by David Card in Media.
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This is, what, business model version three or four? Enough obligatory snark. Lala‘s latest offering is a new twist on the jukebox in the sky, with some aggressive and attractive price points. For 10 cents, you can “own” any single for streaming forever; $1 for most albums. If you want to take that song or album with you, you can apply your online only payment towards a DRM-free MP3 purchase.

Some observations:

– Lala’s signed the four major labels and a lot of indies, so, eventually, its catalog should be good.
– Lala’s paying something close to webcast royalties for the streaming rights, so its model depends a little on “breakage” (you know, like a gym membership some customers don’t use much) and a lot on digital retail upsells.
– There’s very little margin in digital music retail, but Lala makes you prepay, so at least it minimized the damage of individual flat-rate per transaction credit card fees.
– Presumably it can support this model till licensing makes sense and the industry figures out what works.
– You can upload your own collection and have it streamed back to you. That process takes a painfully long time in my brief experience with the service, but in theory it offers convenience and will train users to embrace the streaming jukebox.

Lala says it’s not aiming for the niche aficionado Rhapsody or Napster customer, but if its catalog improves it’s something of a threat. I wish Lala had more to say about social media, money to spend on marketing, and a supplementary advertising revenue angle, but the product offers a consumer pitch with a real sit-up-and-take-notice price. A great way to try before you buy.

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