It had been rumored for about 2 weeks, and then this week, it happened. Apple acquired a music company called Lala. Lala is a web based music streaming service. You select your music artists, and Lala matches the artists to the music you've already downloaded, giving you complete access to your music library (stored on your computer) on, and putting it up in the cloud. Lala's music matching service lets you use any web browser anywhere in the world and have access to your entire music collection any day, any where, any time. Not that big of deal? I would beg to differ, not only is Apple moving into the cloud and giving consumers a jukebox in the sky, but it's also very interesting what it means for the future of the music industry (since Apple is the Walmart of music retailers now). Even more interesting is what it says about consumer choice.
ITunes is a classic walled garden, like the old AOL. You can only buy music from ITunes. ITunes is not compatible with any other service, and, as I've complained about before, it is not easy or convenient to move your purchased music from device (IPod) to device (IPhone). Apple has begun to plan for the future by moving its music service ITunes on the web by merging it with Lala's proprietary technology. The most interesting part of this whole acquisition is just that, Apple NEVER makes acquisitions. For Apple, when it comes to build or buy, Apple always builds. But by buying Lala, this means Apple wants to get ITunes onto the web quickly and buying was the fastest way to do that.
What does it mean for consumers? Well, Apple is stealing Pandora's business model. When ITunes was first released, it meant the music was going to be all about consumer choice. ITunes and the IPod revolutionized the personalization of music. From now on for the consumer, music was exclusively going to be about singular personalization. You could create your own playlist, listen to any track of any song you owned or ripped at any time, basically, you were your own DJ all the time. Apple saved the music industry with ITunes. Prior to ITunes, pirating music was fun, fast, cool, and easy. (Legal Side Bar - Don't steal music, movies, TV shows, or anything else illegally off the web). And ITunes worked for a number of years, but now there is a new generation of kids and teenagers who grew up with ITunes as one of their musical selections, but ITunes had 2 problems: 1. It cost money to buy songs, and kids are cheap and poor and 2. You could only listen to ITunes from your laptop, which you would have to lug around with you everywhere you went.
Pandora's business model, while I'm sure it's not very profitable, is a more compelling statement on consumer choice. Like Google, it's free, which is great, since it removes the pay element. But freedom does have a price when it comes to music. On Pandora's web based free music streaming, you can listen to most songs by your favorite artist, but Pandora would also suggest and play other artists similar to your favorite musician while also playing your favorite artist. Pandora does play commercials on its free web streaming service. And Pandora is highly portable because all you needed was a web browser and your favorite musical artist can go with you anywhere with you without you having to take your computer. The ease and portability combined with free (with restrictions) music, was too tempting for anyone to not use. With Pandora, the consumer model went from ITunes hyper personalization to the consumer giving up some choice and some control in return for free music, sampling other artists music, expanding their musical horizons, and unlimited portability. The music business is evolving yet again.
For Apple, the IPhone and ITouch (which itself has evolved into a portable gaming and web browsing platform), Apple must have taken notice that consumers are using internet radio apps to simply stream music onto their IPhones & ITouches. Consumers are slowing moving into the cloud without even realizing it. As a consumer why would I store all of my music on my IPhone or ITouch when I can simply store other media (TV shows, Apps, Movies) on my IPhone or ITouch, save space and stream music off the internet for free? The entire concept of not being able to stream your ITunes downloads off the internet is a rising concern that Apple has wisely identified before it becomes a major competitive threat and Apple has made a smart strategic decision to rapidly move into that space.
My prediction is that Apple will release a new version of ITunes this summer using Lala's technology (now Apples) and allow you to access all of the songs on your ITunes library via any web browser anywhere in the world at any time. While Microsoft may hold market share, it is increasing looking like Apple and Google are going to end up fighting for consumers in the cloud.
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