Apple-acquired Lala ending service May 31, iTunes.com not starting replacing it any time soon

Streaming music service Lala, acquired by Apple back in early December, 2009, has sent a letter to subscribers telling them they're shutting down as of May 31, and while remaining credit will get transferred to iTunes, streaming music won't show up in an iTunes.com any time soon.

The Lala service will be shut down on May 31st.

In appreciation of your support over the last five years, you will receive a credit in the amount of your Lala web song purchases for use on Apple's iTunes Store. If you purchased and downloaded mp3 songs from Lala, those songs will continue to play as part of your local music library.

Remaining wallet balances and unredeemed gift cards will be converted to iTunes Store credit (or can be refunded upon request). Gift cards can be redeemed on Lala until May 31st.

Click here or visit Lala.com/support for more information, or to view Lala's Terms of Service.

Thank you.

Lala

Rumors have persisted that Apple bought Lala for the talent, or for the lower-cost transaction system, or to take iTunes to the cloud. None of that has materialized so far, but speculation remains that Steve Jobs will drop hints of a Lala-inspired iTunes future at the All Things Digital Conference (where he's introduced a new version of iTunes before), or at WWDC 2010 alongside the 4th generation iPhone (iPhone HD/iPhone 4G) and the final version of iPhone OS 4. If not, Apple's traditional September iTunes and iPod event would be the next likely candidate.

That is, if music companies allow it.

MediaMemo reports that the record labels believe if iTunes users get streaming music to any and all of their devices, the labels deserve a bigger share of the revenue. (Because if I decided to play my CD in my car, in my home stereo, and in my portable while jogging, I had to pay more for that bit of plastic, right?)

While Apple could reasonably and probably legally argue the record labels are crazy and do iTunes.com anyway, it would "enrage" the labels and hurt Apple's efforts to expand TV and other content.

Maybe they could insist Apple create an iTunes++ where they charge us $2 a song for streaming rights. Given the drop in sales following their forcing Apple to raise the price of a "hit" song from $0.99 to $1.29, it would likely be a disaster for everyone, labels, consumers, and Apple. Which means it's probably just what they're trying to do, right?

[Lala and MediaMemo, thanks for the tip Russell!]