Last week there were several sources citing an acquisition of Apple about Lala. Some said Lala was worth $17M, some said as much as $80M. This isn’t clear yet, however what I’d like to blog about is not the value of Lala, but the reason of the acquisition…

To give a brief summary, Lala is actually an online music service which, ‘web-songs’ (that can be streamed) can be purchased for $0.10, and $0.89 for downloads. The service scans your drive and lets you listen all of the mp3s you own for streaming. Basically, all of the ‘magic’ happens at ‘the cloud’ and the need for downloading the songs disappears.

everybody knows, Apple prefers the old-school (offline) method. The mp3s must be downloaded to listen and sync with iPods or iPhones. The songs are listed in iTunes between $0.69 and $1.29, and streaming is not available… But the paradigm shift from downloading the songs to streaming them is really fast, and there are a lot of services out there, especially for mobile platforms. (spotify, last.fm…)

So, it is clear that Apple and Lala have different business models. So why did Apple buy Lala?

Apple might want (to)…
…expand the offline model to online world
…sync the iPod library without physical (cable) connection
…stream the purchased song without downloading it on iPhone
…easy access to playlists or web-playlists
…shared / social playlists among friends
…more advaned ‘genius’ feature
…cheapen the cost of songs

It is not clear if, when and how Apple will change its business model in iTunes, but this acquisition is clearly a strong sign for a step to an online world. Considering the MobileMe services, and the ‘$1 billion server farm project’ news a couple of months ago, a change in iTunes business model seems much more likely to happen soon…

Surprize us Apple!