Apple Purchases Lala Media ➝

Apple recently acquired Lala, a streaming music service that allows users to listen to their music libraries from the cloud.

Apple isn’t purchasing Lala for its licenses, as they are not transferable to any acquirer. Apple is likely after Lala’s engineers who could help them build some sort of music streaming feature for iTunes.

An unnamed source spoke with Reuters regarding iTunes streaming:

Apple recognizes that the model is going to evolve into a streaming one and this could probably propel iTunes to the next level.

Yukari Iwatani Kane of the Wall Street Journal also believes that Apple will transition to streaming music through iTunes.

The key vehicle for the move is Apple’s newly acquired music-streaming service La La Media Inc. for which Apple paid $85 million, according to people familiar with the matter. Where Apple’s iTunes requires users to download music onto a specific computer, Lala.com lets users buy and listen to music through a Web browser, meaning its customers can access purchases from anywhere, as long as they are connected to the Internet.

Apple is considering adopting that same model for songs sold on iTunes, a change that would give consumers more ways to access and manage their iTunes purchases—and wouldn’t require them to download Apple’s software or their purchases.

I expect Apple to continue requiring users download iTunes in order to purchase and stream music, but it’s obvious that media consumption is changing and Apple isn’t one to sit back while others innovate.

Maynard J. Um of UBS Investment Research (reported by AppleInsider) ties this acquisition to Apple’s $1 billion server farm in North Carolina. Apple’s use for such a server farm has been a topic of discussion since we learned of it this summer, but I would expect Apple wouldn’t have known about the acquisition of Lala until after the server farm deal had been done. My guess is that Apple had already planned to build a streaming feature into iTunes and decided to purchase some talent that had already built a similar service.

The future of Lala is unclear. But, I’m curious about what will happen to users who purchased the right to stream songs for 10 cents a piece. My guess is that those songs won’t be available for too much longer.

Update 12/10/09: The Wall Street Journal reports that Google was in serious discussions to acquire Lala before Apple eventually purchased the company for $85 million. They also say that Google is buying music services to compete with Apple’s iTunes business.

Apple and Google’s relationship is getting weirder and weirder.

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