UPDATED Again: Lala Cost Apple $80 (or $17) Million, was all About Streaming, or Talent, or Pay Model...

Apple snapped up online music streaming start-up Lala, and now attention has turned from the what to the why, with three areas of focus: the streaming itself, the talent behind it, and/or the bundled pay model that financed it. For those catching up, Lala scans a user's hard drive for music, then allows them to stream that music over the internet, from anywhere, desktop or mobile. In other words, cloud-based iTunes.

Apple PR's Steve Dowling sheds little light himself:

Apple buys smaller technology companies from time to time and we generally do not comment on our purpose or plans.

The traditional "source familiar with the matter" told Reuters:

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

While the New York Times is hearing, from "one person with knowledge of the deal":

This person said Apple would primarily be buying Lala’s engineers, including its energetic co-founder Bill Nguyen, and their experience with cloud-based music services.

Some have also mentioned Lala's payment system, which might handle bundled transactions more cheaply for Apple than iTunes' current system. Still, regardless of the reasons, like the PA Semi and PlaceBase purchases, it will be interesting to see where Apple goes with Lala. Any guesses?

UPDATE: MediaMemo is reporting, based on multiple sources, that Apple paid around $80 million for Lala.

UPDATE 2: TechCrunch says the sale price was closer to $18 million:

[via MacRumors]

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Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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UPDATED Again: Lala Cost Apple $80 (or $17) Million, was all About Streaming, or Talent, or Pay Model...


Hmm this cloud based options sounds to me like could also take mobile me to the next lvl!

Lala's means of music distribution is definitely a step forward.
Because of the time when iTunes got started, they've been subject to a lot of DRM-related issues from the major record labels. Traditionally the ability to hear a recording on demand over the internet has been classified as a "broadcast."
Just the fact that you can listen to a recording on demand, in its entirety, is new. Every other company that has wanted to offer individualized music streaming (Pandora, LastFM, etc.) has not been able to pull that off. That's very much why Lala was incorporated into Google Music Search -- there's no other pre-existing operation that allows that AFAIK.
Apple makes money by distributing music. iTunes Genius is a way of engaging in targeted advertising, essentially. But it's completely crippled by users' inability to sample music.
Lala's other major service -- providing a cloud-based jukebox of just your own collection, without uploading -- is another good idea. Purchasing music that is stored in the cloud is a part of that. Why one company should be the anomaly and be able to offer all of these services, is a real question.

The short answer to the question: if Apple sees that a novel, good idea is going to make money and compete with them on the same platform(s), for similar services, why shouldn't they buy it? I would expect, however, that we're not going to see any major changes in either Lala or iTunes for a while. The deals that individual companies make with record companies are not the most stable or generalizable arrangements. And, the music recording industry is still more or less without any plan or sensibility at all.

So hold on...
Has the purchase of Lala left rumor status? Is it absolutely true now?
Or are these people still making these comments based off the speculations and hearsay?

I like that idea, but I really hope Lala is able to export music through the dock connecter. I can never get Pandora to play through my dock and it would be nice to stream music while I'm driving in my car.

No wonder the Lala app was never released. Wonder what'll happen to it now. It was my only hope for streaming music on the iPhone since it appears Spotify will never come out in the US due to the big labels' greed.

Pay to STREAM!? No thanks. I'll stick to my music that I already bought (at least once), I KNOW I love it. And when I want to sample something new, I'll stream for free at home on Grooveshark.
*shakes head at Apple...

i thought it streamed music from iTunes, not your hard drive. whats the point in paying to stream music off your computer that you already own?

Come on people! Can't you see that for users such as myself with 60gb libraries and 8gb iPhones that this is absolutly fantastic! I could choose any song and do away with my classic. Think outside the box!

The point of paying to stream your collection is that your music is available whenever you're connected to the internet with no other set-up or maintenance on your end. The concept is similar to the Simplify app, which allows you to stream from a computer in your house. However, that means that you need to leave a computer running in your house, and that you can't stream songs with DRM from the iTunes Store. Other services give you access to your music on the internet if you upload it, in which case you're paying for storage capacity. Lala's service doesn't involve uploading, but because of that, you're dependent on the size of their music catalog. If you have music that's not in their catalog, it won't be available.