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.'"
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
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
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.
Don't you forget that Apple played a huge role in making non-DRM protected music from majors available through online stores in the first place?
First majors started to make unprotected music available through competitors so Apple coudn't control the prices and then they made a bold move and made DRM go away from iTunes for the price of some songs being slightly more expensive than the others.
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?
and then apple had the nerve to charge you $.30 per song to undrm it?
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.
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.
Oh, child, read some history. That had been going on for at least 100 years before Microsoft existed.
I don't respond to AC's.
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.
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?
amazon DRM free first? impossible. they didn't even have a music store yet.
http://arstechnica.com/uncategorized/2007/06/emi-says-drm-free-music-is-selling-well/
Although the iTunes Store was the first online store through which EMI sold its DRM-free tracks, Amazon recently said that it will also be selling DRM-free EMI songs through its newly-announced music store later this year
"apple had the nerve to charge" ...so apple made DRM go away in exchange for higher prices. you think amazon raised prices because apple did? or you think amazon raised prices because the lables told them to? makes no sense to RAISE your prices to match the competition unless the IP owners set the terms (for DRM free). makse more sense to me to keep the price LOWER (you know, to attract more customers) - than to raise them
no. "price increases by the record labels, which were made possible by Apple's capitulation."
http://news.cnet.com/amazon-follows-apple-to-$1.29/
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.
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 !
wasn't amazon selling non-drm music for years before apple?
No, Apple were first with EMI. The rest of the big 4 held back from apple, so amazon were the first to have all their catalog unlocked.
and then apple had the nerve to charge you $.30 per song to undrm it?
Erm, first of all, they charged you $.30 per song to upgrade to a higher quality version that happened to be DRM free.
But let's pretend for a moment that they did - who ever offered an upgrade to DRM free music - or video, or programs; free or paid? Who but Apple ever gave their customers that? Or for a higher quality version of the media? Who?
Actually, others who dropped DRM, dropped the right to play the media you already paid for.
Of course news about a fake are Fake News.
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!!