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Lala online music platform re-launches in beta with updated features
Territories covered
North America
USA,
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Published:
30-May-08
Lala, the online music platform, has re-launched in beta with updated features. La La Media, the operator of the service, is tied to major label Warner Music Group (WMG). WMG invested $20m in the firm in January 2007 and then increased its interest by advertising La La Media in its CDs. In total, La La Media has reportedly raised $34.7m to date. Bain Capital also owns a 20 per cent holding. Details of the new platform, restricted to users in the US, are as follows:- Members can pay $0.10 per track to stream songs any number of times from an internet-connected device with a browser and Adobe Flash software. A track can be streamed in full once, free of charge; subsequent free plays are limited to 30 seconds. New users receive 50 streaming tracks with unlimited access at no cost, after which they must pay by depositing funds in pre-paid accounts.
- Some tracks are offered as DRM-free MP3 downloads that can be transferred to any portable music device or MP3-enabled phone, most of which cost $0.89. (There is a $0.10 reduction if streaming rights have already been bought).
- Users can add music stored on their PC to a digital locker using a free downloadable application. Those tracks already licensed in the Lala catalogue are matched and can be streamed immediately; those not licensed must be uploaded before they can be played. No DRM-wrapped songs can be uploaded, however.
- Music discovery/social interaction features have been integrated: users can see what friends are playing via the music feed that monitors listened to, bought and added tracks; streaming rights can be bought for tracks as gifts for friends; selected tracks can be shared with friends. The platform also provides recommendations based on buying, uploading and listening habits.
- Members can click on album detail pages to buy the CD version; they can also swap CDs with others.
- Although full details on the catalogue have not been released, the beta service claims to offer 5m tracks for streaming. It is widely expected that all major labels will contribute large portions of their digital catalogues. Tracks listed on artist, album and genre pages are ranked by number of listens, and users can generate playlists as they stream.
Our take...
WMG's investment in La La Media forms part of a trend by major records labels to take equity stakes in emerging companies which operate more experimental platforms that frequently incorporate social networking elements and monetize tracks either via advertising or paid transactions. For the labels, investing in third-party start-ups gives them a strategic role in developing services in which they can try out new methods of generating revenue in a controlled environment, while also benefiting financially from services that see significant takeup. For the platform operators, labels provide the required capital and catalogue to build services.
The continuing plummet in CD sales has been a major factor in precipitating this move, as WMG and others look to source revenue from digital services and other avenues, including concert tickets and merchandise. Further investments by the major labels into music-based social platforms include Mog (UMG and Sony BMG stakes) and MySpace Music (WMG, Sony BMG and UMG interests).
Lala has had difficulty in finding a successful business model. It started as an online CD swapping service, before offering free streams of WMG and independent label tracks (with the option of buying MP3 versions). Its current platform hopes to similarly upsell users to more expensive MP3 versions of tracks that can be transferred to portable devices and mobile phones for listening on the move. Historically, however, the pay-per-stream model has not seen significant traction. Services such as MyCokeMusic and Tiscali Music Club, powered by OD2, attempted the model but have since shuttered.
Drawbacks of the pay-per-stream model include the inability to transfer tracks between devices; the requirement for the device to be internet-connected in order to stream songs; competition from rival streaming services such as Imeem, Last.fm and the updated MySpace Music service that offer music at no cost to users. To its advantage, however, the ability for Lala members to back up locally stored music at no charge and access tracks from a variety of locations are attractive features. Additionally, the size of the catalogue and the support of all the major labels could help encourage usage.
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Analyst intelligence & notices
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