UPDATE: The New York Times says Apple is, in fact, buying Lala:

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.

Lala’s engineers have built a service that music enthusiasts say is very easy to use. Lala scans the hard drives of its users and creates an online music library that matches the user’s collection, making it painless (and free) for people to get their music in the cloud.

ORIGINAL: Last we heard, cloud/streaming music service Lala was getting on the iPhone App Store while simultaneously partnering with Google, but now there are reports that Apple might just be in negotiations to buy them outright (Lala, not Google!)

Talks are very advanced, said the sources. One of the sources said that the sides have already agreed on terms and have only to sign a final agreement.

Steve Dowling, Apple's spokesman, said the company doesn't comment on rumors and speculation. A representative from Lala was not immediately available.

Would Apple marry Lala's "store everything in the cloud and stream it to your devices" with their "people want to own their music" on-drive iTunes? Contradictory or complementary?

Do you see a fit? Do you want one?

[CNET via MacRumors]