Slashdot Mirror
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.'"
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.
Are you sure you read the article? LaLa approached Apple and asked to be purchased.
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
That DID happen. For a few months, you could search for any song, and Google would display the song with "play" button at the top of the search results that played the entire song. It worked flawlessly.
I don't respond to AC's.
For every track played on spotify, the "label" gets $.0017. Buying through iTunes is vastly more beneficial to content producers.
OK... but what happens when the track is in your playlist, and you listen to it every day on a subscription service, for 2 years (assume about once a day); in other words 365 x 2 = 730 times spread out over 2 years?
OK, discounted ~5%/Year = 0.0137%/Day , the present value of that stream of revenue for the label would be:
( $0.0017 / 0.000137)*(1-1/(1+0.000137)^730) = $1.18
And despite them having gotten $1.24 from you worth $1.18 today..... you still don't own the sound track. You have to continue the subscription, if you want to keep hearing it :)
So... the question becomes... what happens, if you keep listening to the track once a day one third of the days of the rest of your life? Assuming you are age 30, and live until age 70, that's 4870 listens, or $0.017 * 4870 = $82.79
Which is worth approximately ( $0.0017 / 3 / 0.0000102669)*(1-1/(1+0.0000102669)^4870) = $2.69
In today's dollars, and $2.69 is a heck of a lot more money for the label than $0.70, hell, it's over 3 times as much.
For you to subscribe to the service, and listen to your music through that, as long as they get their little .17 cents every time :)