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Lala – interesting business model for online music

Regular readers will know I have long been a believer that music is heading into the cloud and that over time the dominant delivery model will be streamed with monetisation coming either via in-stream audio ads or subscription.

I have just read about an alternative model from a company called Lala which could be more compelling – pay a deminimis amount to own a ‘web copy’.  On their site you can listen to any track once for free, but if you want to listen a second time you have to pay 10 cents (site not available in the UK yet :( so I don’t know what it will cost here).  After that you can stream the song as many times as you like, although you can’t download it – i.e. you own a ‘web copy’.

It could well be that 10 cents is small enough that people simply don’t worry about it and frequently click to add songs to their web portfolio.  As a user that would be better for me that either paying $10 per month subs or putting up with ads.

Maybe ‘deminimis’ is the new free?!?

Coming back to music services; business model is only part of the battle of course, with user interface and catalogue being the other two important areas.  They apparently have agreements with all the major labels and on a quick test of catalogue for obscurish UK indy bands Lala did OK, but I haven’t been able to see the UI.  What I can see is that they have done some clever things to help people get started – e.g. 50 free web songs when you sign up and ability to import all the MP3s on your hard drive into your web album for free.

This last point is potentially very significant and according to Techcrunch was a hard one for them to get agreed with the record labels, but it leaves me wondering how much revenue they will succeed in generating.  At 10 cents per track added I’m guessing for mainstream users the average revenue per year will be pretty small.  To get near the $10 per month subscription cost you would have to be adding 100 songs each month, which seems like a lot to me.

  • http://twopointouch.com Ian Delaney

    I don’t know if you used any of the Russian sites, such as allofMP3, offering MP3s for 10c. I did – and spent about 100X as much on music as I normally do over the period I used it. A low, low price really encourages experimentation. And, it seems, like allofmp3, they have made the interface and usability far greater than is available via illegal sources.

    Delighted that the majors have agreed to join this venture!

    Would be spending money there now, if it was open to UK users.

  • http://twopointouch.com Ian Delaney

    I don’t know if you used any of the Russian sites, such as allofMP3, offering MP3s for 10c. I did – and spent about 100X as much on music as I normally do over the period I used it. A low, low price really encourages experimentation. And, it seems, like allofmp3, they have made the interface and usability far greater than is available via illegal sources.

    Delighted that the majors have agreed to join this venture!

    Would be spending money there now, if it was open to UK users.

  • http://www.we7.com We7Steve

    Yes, it is a shame that UK users can’t try it yet and it is an interesting new model for the industry, although is there much advantage in paying for it to be in an online locker until mobile devices are constantly connected to the internet? We7 has backing from the majors and allows you to create playlists and play streamed music as often as you like for free and it’s available to UK users!

    Steve Purdham
    CEO – We7
    http://www.we7.com

  • http://www.we7.com We7Steve

    Yes, it is a shame that UK users can’t try it yet and it is an interesting new model for the industry, although is there much advantage in paying for it to be in an online locker until mobile devices are constantly connected to the internet? We7 has backing from the majors and allows you to create playlists and play streamed music as often as you like for free and it’s available to UK users!

    Steve Purdham
    CEO – We7
    http://www.we7.com

  • http://www.v-burny.com Victor

    It is quite interesting to see how Lala has been trying to find a suitable business model in the last few years. I wonder how their customers feel.

    They have taken the idea of Emusic.com to give away 50 free mp3s when you signup, good, but paying 10 cents for listening a sample is not a good idea on the long term. How much do the record labels take on those 10 cents? 20-50%? (Steve Purdham: I am sure you are the best person to answer that question, from On Demand Distribution (OD2) to We7, you have the experience to deal with music labels :)- By the way, I have signup to We7 the first day you have launched it. I quite like it. Good job! )

    Lala may still change its business model once again in 1-2 years, if the investors are willing to lend again!

    The concept of "web copy" is the way forward. I don’t know if you have heard about the new V-Burny.com (Audiobook Marketplace), but it is the first website that provides the "Digital Private Copy" feature. It means that when a customer purchase a hard copy CD or tape, he gets automatically a free digital copy in MP3 format available in a "digital locker". He can then download on his computer or listen online at anytime.

    What do you think about our concept?

    Victor (Co-Founder, http://www.v-burny.com)

  • http://www.v-burny.com Victor

    It is quite interesting to see how Lala has been trying to find a suitable business model in the last few years. I wonder how their customers feel.

    They have taken the idea of Emusic.com to give away 50 free mp3s when you signup, good, but paying 10 cents for listening a sample is not a good idea on the long term. How much do the record labels take on those 10 cents? 20-50%? (Steve Purdham: I am sure you are the best person to answer that question, from On Demand Distribution (OD2) to We7, you have the experience to deal with music labels :)- By the way, I have signup to We7 the first day you have launched it. I quite like it. Good job! )

    Lala may still change its business model once again in 1-2 years, if the investors are willing to lend again!

    The concept of "web copy" is the way forward. I don’t know if you have heard about the new V-Burny.com (Audiobook Marketplace), but it is the first website that provides the "Digital Private Copy" feature. It means that when a customer purchase a hard copy CD or tape, he gets automatically a free digital copy in MP3 format available in a "digital locker". He can then download on his computer or listen online at anytime.

    What do you think about our concept?

    Victor (Co-Founder, http://www.v-burny.com)

  • nic

    Hey Viktor – what is the difference between a digital locker for my music and any standard web storage where I could back up my MP3s?

  • nic

    Hey Viktor – what is the difference between a digital locker for my music and any standard web storage where I could back up my MP3s?

  • skinnyPoison

    Hi,

    You should better check this out: http://peoplesmusicstore.com

    It’s completely new business model because on this site, it is people who choose what to stock, promote, and sell DRM-free mp3s from their own personalised store.

    This is really innovative because we can sell music we love directly from our site or social network profile, and each time someone buys something from my widget store, we get a cut – "10% in the form of points which can be redeemed by purchasing music on the site"

    cheers,
    skinnyp
    http://peoplesmusicstore.com/rose_is_a_rose

  • skinnyPoison

    Hi,

    You should better check this out: http://peoplesmusicstore.com

    It’s completely new business model because on this site, it is people who choose what to stock, promote, and sell DRM-free mp3s from their own personalised store.

    This is really innovative because we can sell music we love directly from our site or social network profile, and each time someone buys something from my widget store, we get a cut – "10% in the form of points which can be redeemed by purchasing music on the site"

    cheers,
    skinnyp
    http://peoplesmusicstore.com/rose_is_a_rose

  • skinnyPoison

    And the founder of people’s music store is also the one who set up bleep in january 2004. Bleep was the first online music service to offer high quality DRM free files at a crucial time – there were indeed no alternatives to peer-to-peer networks.

    cheers
    skinnyP

  • skinnyPoison

    And the founder of people’s music store is also the one who set up bleep in january 2004. Bleep was the first online music service to offer high quality DRM free files at a crucial time – there were indeed no alternatives to peer-to-peer networks.

    cheers
    skinnyP

  • http://www.v-burny.com Victor

    Nick,

    In terms of features, it is clear that there is a difference between companies that focus on providing a digital locker (e.g. http://mp3tunes.com/) Vs those that offer a simple web storage (e.g. Box.net). A web storage is like a hard drive in the sky, you cannot play your MP3s. Whereas a digital locker you can liste/watch, etc… your media.

    Am I answering your question?

    Victor (Co-Founder, http://www.v-burny.com)

  • http://www.v-burny.com Victor

    Nick,

    In terms of features, it is clear that there is a difference between companies that focus on providing a digital locker (e.g. http://mp3tunes.com/) Vs those that offer a simple web storage (e.g. Box.net). A web storage is like a hard drive in the sky, you cannot play your MP3s. Whereas a digital locker you can liste/watch, etc… your media.

    Am I answering your question?

    Victor (Co-Founder, http://www.v-burny.com)

  • Victor

    .

  • nic

    Hi Victor – I understand your point. I guess whether the difference between a digital locker and simple web storage, as you describe them, is significant :)

    best,
    Nic

  • nic

    Hi Victor – I understand your point. I guess whether the difference between a digital locker and simple web storage, as you describe them, is significant :)

    best,
    Nic

  • Victor

    Hi Nick,

    I guess we can debate for years this question. Let’s say we focus on the end user, who is not a geek: No, you’re right there is no clear difference. :)
    Let’s be honest: “Digital Locker” like “CRM” (customer relationship marketing) is a marketing term invented by companies who provide those types of services to differentiate themselves, and give the impression to the public they have invented something new.

    Now, if we go back to your original story, Lala.com. My point was that the “Digital Private Copy” is the way forward, for businesses who want to offer digital music/video, without spending months in negotiation with music labels and other publishers. It is perfectly legal. See here to understand http://www.v-burny.com/Bill-of-rights.html. If you buy a music CD at Ebay or Amazon for $0.50, you know that you will rip it, digitize and transfer to your iPod plus upload to your web storage/digital locker, right? Well, legally, Amazon/Ebay does not need the authorisation of the music labels to give you access to this digital copy well before the postman knocks at your door to deliver the CD.

    Now think: why pay £0.79 per song at itunes or $0.10 per streaming at Lala, when at markeplaces like V-Burny/Ebay/Amazon, you could buy the full cd of the Beattles for maybe $1.50, and get the 12 songs available to listen online and download immediately after purchase, from the webstorage/digital locker they provide?

    That’s why the “Digital Private Copy” service is the way forward for all online retailers. No more time spent dealing with record labels, no more discussions about on Digital Right Management.

    You agree?

    Victor (Co-Founder, http://www.v-burny.com)

  • Victor

    Hi Nick,

    I guess we can debate for years this question. Let’s say we focus on the end user, who is not a geek: No, you’re right there is no clear difference. :)
    Let’s be honest: “Digital Locker” like “CRM” (customer relationship marketing) is a marketing term invented by companies who provide those types of services to differentiate themselves, and give the impression to the public they have invented something new.

    Now, if we go back to your original story, Lala.com. My point was that the “Digital Private Copy” is the way forward, for businesses who want to offer digital music/video, without spending months in negotiation with music labels and other publishers. It is perfectly legal. See here to understand http://www.v-burny.com/Bill-of-rights.html. If you buy a music CD at Ebay or Amazon for $0.50, you know that you will rip it, digitize and transfer to your iPod plus upload to your web storage/digital locker, right? Well, legally, Amazon/Ebay does not need the authorisation of the music labels to give you access to this digital copy well before the postman knocks at your door to deliver the CD.

    Now think: why pay £0.79 per song at itunes or $0.10 per streaming at Lala, when at markeplaces like V-Burny/Ebay/Amazon, you could buy the full cd of the Beattles for maybe $1.50, and get the 12 songs available to listen online and download immediately after purchase, from the webstorage/digital locker they provide?

    That’s why the “Digital Private Copy” service is the way forward for all online retailers. No more time spent dealing with record labels, no more discussions about on Digital Right Management.

    You agree?

    Victor (Co-Founder, http://www.v-burny.com)

  • nic

    Hi Victor – if you can get it that cheap then I’m with you, it does sound like a better deal.

  • nic

    Hi Victor – if you can get it that cheap then I’m with you, it does sound like a better deal.

  • ping

    i will like to ask you one thing

    what is the background idea on which lala.com basically based ???? and what type of internet business model basically they are using when we compare it with different services like Amazon or ebay etc

  • http://www.theequitykicker.com brisbourne

    Lala is a platform where authors can self publish. Amazon is a place where you can buy books that have been published. That is the key difference.

  • ping

    i will like to ask you one thing

    what is the background idea on which lala.com basically based ???? and what type of internet business model basically they are using when we compare it with different services like Amazon or ebay etc

  • http://www.theequitykicker.com brisbourne

    Lala is a platform where authors can self publish. Amazon is a place where you can buy books that have been published. That is the key difference.