A new music service will be available starting today on
lala.com. The company decided on a different marketing approach, offering all
of its 6 million tracks free for online streaming.
Its archives are being filled with tunes from all the four
major record companies (Sony, EMI, Warner and Universal) and also 170,000
independent labels.
Users will be able to store their favorite tunes in a Web
folder and access it from any computer, paying 10 cents for each song, or
download an MP3 track, free of any digital rights management coding, for 79 or
89 cents.
Another difference between lala.com and other such services
is that the Web site is ad-free, making its profit from selling Web tracks and
MP3s. Lala’s chief executive, Geoff Ralston, talked about this policy, saying
that “You want to help people discover music. You don’t want to slow them down
with ads.”
Co-founder Bill Nguyen explained that the strategy has been
carefully prepared and the only problem would be if they record too many streamed
tracks and very few sold tunes. The tests provided sufficient information about
the general trend displayed by the users, with about 60 Web songs and 60 MP3s
sold for every 1,000 free streams. If these figures will remain constant, the
project will represent a great success, as in order to be profitable, the
company must sell 15 to 20 Web songs and about the same amount of MP3s for each
thousand free streams.
The system allows users to upload their music from iTunes
and personal CDs into their Web locker, gathering information about a user’s
preferences and then displaying similar songs and bands, procedure that brings
significant additional revenue.
The online music industry is expanding rapidly, gaining
ground on the sales recorded from selling physical CDs and the labels use every
opportunity they get to bring their materials to popular Web sites. "We do
streaming deals that also have an upsell opportunity," explained Thomas
Hesse, president of global digital business for Sony Music Entertainment Inc.
Mr. Nguyen strongly believes that over the next couple of
years the importance of browsers and Internet access will be considerably
bigger, allowing users to access all their data directly no matter their
location. "Will you ever (in the future) use an electronic device if it's
not connected or doesn't have a browser?" Nguyen asked. "PC's are
going the same way," he continued, "with the hottest category being
Netbooks that forego fancy hardware and big screens for an affordable price,
light weight and a Wi-Fi connection. You've got to face it, there's nothing you
don't do in a browser."
The evolution of the iPhone confirms his belief. The
smartphone’s new version has a bigger price and significantly smaller storage
space, but it is equipped with a wireless connection and a browser.
Lala.com was first launched in 2006 as a CD-trading Web
site, then it turned into a free Web-based music browser and this current
project represent its newest direction, which might record a longer activity
then the previous two.