Apple Making A Play For Music Site LaLa?

LaLa

Apple (NSDQ: AAPL) is in discussions to buy music site LaLa, Bloomberg reports, citing unidentified sources. There were no details about what sort of prices Apple and Palo Alto-based LaLa might be negotiating over. LaLa’s library offers users more than 8 million songs. After nearly four years of existence and at least two business models, LaLa lets listeners stream any song in its collection once without charge. After that, users have to pay 10 cents to access a selection online. LaLa already has deals with the major labels, including EMI Music, Warner Music Group (NYSE: WMG), Sony (NYSE: SNE) BMG Music Entertainment and Universal Music Group.

LaLa began its life as a CD swapping service. After nearly closing up shop, the company switched to its current model a little over a year ago. In addition to streaming, the site does sell Mp3s and lets registrants to the site share playlists with other members. While Apple’s iTunes is the dominant digital music store, there is no end to the list of potential disruptors of that business, whether its social nets like MySpace or online jukeboxes like Rhapsody or online radio stations like Lastfm and Pandora.

LaLa has jumped on that bandwagon, netting a deal with Facebook in October. Clearly recognizing the benefits of aligning with others, LaLa was included in a search partnership that Google (NSDQ: GOOG) struck with MySpace’s iLike and four major record labels that same month. It’s possible that Apple feels it can use LaLa as a way to blunt any challengers to its throne, without having to alter the model of its iTunes pay-to-download store, which is primarily a vehicle to support the sale of its iPod line of devices.

As for LaLa’s business, the company has raised funding from Bain Capital Ventures and Ignition Partners. In spring ’08, the site received a $20 million investment from Warner Music Group. In the past, LaLa had also shown interest in doing some investing of its own. For example, a few months after LaLa opened its doors, the company invested in online radio station WOXY.com.

Update: While NYT and MediaMemo say they too have confirmation from unidentified sources about a possible deal in the works, there has been no official comment from either Apple or LaLa. So it’s uncertain how serious the discussions are or if anything will come of it. But it does signal that Apple is at least interested in expanding its horizons.

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