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How Apple Killed an iTunes Competitor
An anonymous reader writes "Ed Bott recounts the story of Lala.com, an innovative online music service that reached the top of Google search rankings for consumers seeking music. Their prices were frequently better than the prices on iTunes, and they partnered with Google for the search giant's Music Beta. Lala's founder, Bill Nguyen, decided the time was ripe to sell, entertaining offers from both Google and Nokia. Unfortunately, Nokia's offer was poor, and Google tried to lowball Nguyen. Apple, however, was not so foolish. Correctly identifying a threat to its growing music empire, Steve Jobs offered $80 million for the company, and Nguyen accepted. 'The ultimate irony in this story is that quite a few notable members of the Lala-to-Apple team followed Bill through the door and onward to his next venture. They left millions in options at a the $196.48 exercise price they had from the 2009 sale/retention bonuses. Some of those same engineers returned to Apple in the highly covered [Color Labs acquisition] rumor that 20+ engineers went to Apple for $7M. Apple obtained the same employees for pennies on the dollar. This time with even more experience and startup life under their belt. Paying twice was genius.'"
I still go out of my way to give my business to Amazon or any other legal alternative to avoid doing business with apple whenever possible.
Really not sure what it was they did to piss me off (probably a huge pile of small things over the years) but man I just do not like them.
if we have learned one thing with IBM and Microsoft is that you can't stop technological and cultural change
subscription music is here to stay and apple can't do anything about it
..what can kill and what can heal them
I like that this same story was on macrumors as "how Steve jobs acquires a company" and on /. It's how apple KILLED a competitor. Dramatic much?
Lala was not the threat. The threat was that Google would acquire Lala and in turn would combine it with their position in the search engine realm. That was the threat and Apple paid the price to keep Lala out of Google's hands. It would have been interesting to see what would have happened if Google hadn't tried to lowball them and had bought Lala at the time.
'The tyrant will always find pretext for his tyranny.' - Aesop's Fables
It's disappointing how the Microsoft-pioneered "buy up your competitors before they can afford to buy you" technique has become standard practice for Apple. Up until the day before they were purchased, so many people I knew were using Lala on a daily basis. And why wouldn't you use it? Lala had a great catalog, came up high on Google results, offered full songs for preview, and worked in any web browser. And this was all 2-3 years before Spotify was available in the US.
When Apple bought them, I naturally assumed they'd be offline for a couple days and then reappear on "me.com" or something. In fact, months went by before I realized that wasn't going to happen.
It's too bad. iTunes has gotten a lot better, but competition is always a good thing.
Apple didn't kill a competitor, a competitor simply sold out, taking $80M and abandoning their creation to others. They apparently made no provisions in the contract with Apple to continue the service and protect existing Lala customers. They could have required that these existing customers continue to be provided the Lala service for a reasonable timeframe but apparently they did not. Apple was free to shut it down in what looks like 5 months.
It seems biased to blame it all on Apple.
Those of us who cared knew about this when it happened, so stop trying to give history lessons and get back to news for nerds. Maybe then I'll bother to log in.
wasn't amazon selling non-drm music for years before apple?
About a year.
It was the music companies last ditch attempt to break free from Apple.
It failed so finally music companies allowed Apple to sell DRM free music (which was never under Apple's control, it was up to the labels which is why Amazon got to do so a year earlier).
"There is more worth loving than we have strength to love." - Brian Jay Stanley
The company I own is worth approximately that much, and if ever anyone offered me 80 million for it, the only part of me that would remain would be the cloud of dust dissipating where I had my last presence within its walls.
I didn't start my business because I'm "passionate" about what I do or because I "love" my work. I started it to make money, and for no other reason.
One of the biggest mistakes so-called entrepreneurs make is getting emotionally attached to their work - and I see it happen all the time in my VC club. I've been an angel for a number of startups, but we almost always turn down the ones where the pitch is not much more than how "passionate" the people are about their companies.
I remember using Lala, mostly at work. At the time it was much nicer to use than iTunes and Pandora.
I remember the day when I found out that Apple was shutting down Lala, and I was very disappointed, because Apple is very insistent that people only use technology in the way that Apple wants them to. I do generally like Apple's interface design, but Apple is very insistent that its way is the best, and they have been insistent even in the cases that they've been wrong.
Lala had then what Amazon, Google, and Apple have only recently added, which is the ability to basically mirror your library from their website, and when Apple bought the service it was a big loss. I think Google or Amazon would have actually built on the service, but Apple just killed it, and that sucked.
The 'Angels' at Lala.com were not so 'Angelic'; evidence reveals.
From the article: "He [founder Bill Nguyen] called in a few favors and got a meeting with the leadership at Apple. He explained that he had offers from the largest mobile OS competitors and that they wanted to acquire his music startup."
That is not Apple hunting down and killing a competitor. That is a company shopping itself around and playing potential buyers off of each other to maximize the sale price.
My point is that the loss of the Lala service is not entirely Apple's fault. Lala's management deserves to share in that responsibility. They chose a buyer unlikely to continue the service. They apparently did not require a commitment from Apple to continue the service for current customers for a reasonable timeframe.
Since this is a couple years ago, how is this news for nerds?
Wouldn't a story about a $30,000 NASA Contest to Boost Space Station's Power be more news than this?
Where did the nerds move to so they could get more news for nerds instead of two year old stories about apple?
_ _ _ Go for the eyes Boo! GO FOR THE EYES!
All the short positions already banked in at $500 a share. You can stop with the negative stock manipulation articles now.
I used Lala quite a bit, and in all honesty, I didn't expect it to stick around even before Apple bought the company. You could preview an entire track for free, then pay ten cents for unlimited listens with no ads and no subscription fees. With payment processing fees, servers, storage, and bandwidth, I doubt Lala was making anything, much less paying the record companies. Heck, you would have had to buy six hundred songs a year just to match Spotify's cheapest subscription. Twelve or eighteen hundred to match Zune or Rhapsody. Oh, and did I mention Lala would even scan your existing music library and then let you stream all your songs from their servers for free? Yeah, that's a sustainable business model.
I'm sure Lala was nothing but acquision-bait, like Youtube and Instagram. Offer a good service for way below cost, get a huge following, find somebody with deep pockets to buy your "community" and retire to a tropical island.
How can I believe you when you tell me what I don't want to hear?
...video killed the radio star.
I remember the day when I found out that Apple was shutting down Lala, and I was very disappointed
Reading the article though it seemed you were doomed to disappointment no matter what. LaLa was not making money as was going to close down. I'm not even sure any of the other companies buying LaLa would have meant it would stay open.
Lala had then what Amazon, Google, and Apple have only recently added, which is the ability to basically mirror your library from their website, and when Apple bought the service it was a big loss.
That is a huge loss, I was really sad when I lost the same ability from MP3.com years before that point. I don't know that LaLa would have survived offering it for long either.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
WOXY was the single best radio station I've ever come across to discover great up-and-coming new indie bands. It was a longtime terrestrial radio station that operated out of Cincinnati. When you watch dustin Hoffman annoying the shit of Tom Cruise by incessantly repeating "97X, BAM! the futurrrre of rock-n-roll", he's repeating WOXY's tagline. The station switched over to an internet-based ad-free model in the early 2000s and got into financial trouble. Lala became the station's patron savior, financially keeping the station alive, hoping to parlay its relationship with the station into indie credibility and an instant customer base. It worked too well. When Apple bought Lala there were many that hoped the company would continue to support the station, but alas, Woxy shut down almost immediately after the purchase and has been dead ever since. RIP WOXY.
Increasingly musicians (and movie makers, and writers) are realizing that they can cut the middle man out entirely, become their own label, and deal with Apple/Amazon/etc. directly. It's a lot of freaking work, but it gives artists total control, and have longer and more profitable careers than record labels that want to churn flash-in-pan artists for maximum profit before going on to the Next Big Thing.
And Apple and Amazon, for all the bitching people do about them, are the ones whose domination of Internet sales has allowed musicians to break the parasitic grip major labels had on the marketplace. The Internet would have accomplished the same disintermediation sooner or later, but Apple alone probably hastened the results by a decade.
In the future, all artists will be their own integrated vertical monopolies.
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
Where exactly do I get a job like that, that pays well, with medical?
I am no Apple fanboys, but the title "Apple kills competitor" is misleading.
Lala.com was for sale. Apple bought it fair and square.
If only Google wasn't so foolish to play lowball, Google would have a powerful franchise right now to out-compete Apple on its own turf.
Muchas Gracias, Señor Edward Snowden !
Surely getting paid twice is genius. Paying twice is just stupid.
I should go read the article...
I say that because, when compared to another online service. Both apple and amazon are entirely overpriced. The site meoldishop.com has whole albums for around $1 and songs for $0.10. That's as close to pirating without being illegal.
If Bill Nguyen had wanted Lala to succeed, he shouldn't have sold it to a competitor. I think everyone could predict this would happen. He chose for cash in the short term and that is what he got. That was his choice and there is nothing wrong with that. It might not have been my choice, but then it was not my company.
...on how to piss away $80 million.
He put it up for sale. Apple made and offer and he accepted. End of story.
Bill Nguyen negotiates a better deal out of Apple and Ed Bott distorts this into Apple killing Lala. If apple owned both Lala and iTunes why wouldn't they merge the two?
AccountKiller
Apple stills sucks, and I still don't own anything made by Apple.
re: all about the business of business
.
Yep. When the MBAs move in to the management structure ( whether it's part of the "growing" of a small company as capital comes into it from investors or if it's because the founder's sons or daughters finished college, got their MBA and came home to roost in their pre-ordained family job ), the presence of those only interested in the business of business instead of the actual business of the company leads to the deterioration of that company's performance. My local example: a nice bbq restaurant that my family and I have noticed is going downhill over the last 4 years: lots of little performance enhancers being added, the workers get new uniforms that make no sense (really, white shirts for a bbq server?), restructured menus and prices, shrinking the size of the beverage cup (yet still allowing unlimited refills, thus annoying both the customers and the waitress-staff at the extra work required and the amount of time the customer is without a beverage!), and a few other silly things.
These little tweaks are not appropriate for the business specifically; they seem like tweaks that were generated from a list of "business enhancing" or "profit enhancing" changes. Kinda like a viagra-pill for businesses!!
How about being able to copy files from PC to phone, from phone to phone, either through cable or standard bluetooth communication? I'm at a presentation showing a PDF to customers and I can't *give* it to them. Yes, I can put it on the internet and give them an URL, but even giving them the URL is painful on mobile!
In the past I loaded an arbitrary PDF into Apple's iBooks app. Its a technical document I wanted to have available even when offline. I just launched the iBooks app, I tap on the collections button to switch from books to PDFs, I tap on the share button and one of my options is email.
I just opened a spreadsheet using Apple's Numbers app. The spreadsheet is stored on iCloud and I access it both from computers and iOS devices. While on an iPad I tapped on the tools icon. One of my options under "share" is to email the spreadsheet. I opened a word processing document in Apple's Pages app. The same functionality is offered.
Note that both Numbers and Pages also offer an option to copy the document to iTunes. That will keep the document in sync between computers and iOS devices if one does not want to use iCloud.
I guess it just goes to show his shallowness.
It's a ton of freaking work. The reason there *are* middlemen in the first place is becasue most artists are simply not skilled (or don't have the time) to write, produce and record albums AND handle all the business and sales crap. Middleman services like TuneCore or Reverbnation have replaced an active Agent or A&R guy in a lot of cases, but it's still a middleman, in a way. Even if you're a fulltime musician, sometimes there just aren't enough hours in a day to do everything without cutting corners someplace.
A totally DIY approach is the end goal for a lot of musicians. It's just out of reach for most of them.
----
"I used to listen to Null Device before they sold out."
Schedule volume changes. My notifications turn off at night, but not my ringer, so important phone calls get through. I don't do a thing; it's automatic! This is important because I would forget to turn it back on in the morning.
Apple iOS also offers this. Its called "Do Not Disturb". You can define exceptions to let through, you can optionally let through an immediate second call from the same number, etc.
Does it do anything useful?
Birds are not dinosaur descendants;birds are dinosaurs, for all useful meanings of "birds", "are" and "dinosaurs"