Apple Buys Lala to Get A Piece of the Cloud

Apple has acquired music streaming service Lala and we are left wondering what, exactly, they’re planning to do with it. We just recently covered iLike and Lala being behind some major music initiatives involving Google and Facebook. Lala had partnered with Google to help power their Music Onebox service and were also working with Facebook to allow us to purchase musical gifts for our friends.

According to the NYT, it appears that Lala may have been facing financial trouble and were looking for a way to turn things around. These recent moves could have been steps in that direction, but the fact that Lala has chosen to sell indicate that they were unsuccessful.

One person with knowledge of the deal, but who was not authorized to discuss it, said that the negotiations originated when Lala executives concluded that their prospects for turning a profit in the short term were dim and initiated discussions with Eddy Cue, Apple’s vice president in charge of iTunes.

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.

To understand the ramifications of this purchase, it’s important to understand what Lala really is: iTunes in the cloud. Instead of purchasing music from a website and downloading it to your computer, you simply buy what you want and play it instantly from your library in the cloud. Lala will also match the songs on your computer to the ones in their library and adds them to your online collection. You can even play any song for free, but only once. It’s only 10 cents to add a song to your online library and play it unlimited. 79 cents to download the actual mp3.

With all of the streaming music services out there, it’s pretty easy to see why Apple would be interested in a service like Lala. Sure, people still like to download mp3’s for their iPods, Zunes, or whatever, but there are still others who just like listening to music online. Not only that, they want easy access to new music as close to free as they can get it. With iTunes songs ranging from 69 cents to $1.29, unlimited access to a full song for 10 cents sounds pretty nice. I think Apple is just trying to get a piece of the cloud before it’s too late.

Not sure what’s going to happen for existing Lala users or with the partnerships Lala has in place, but I think all users of both Lala and iTunes may benefit in the long run.