Apple evicts Lala from the cloud; Will web-based iTunes move in?

May 1, 2010 - By Justin E. Gehrke

According to published reports, Apple will shut down the online music service, Lala, effective May 31, 2010. Nearly six months ago, Apple acquired the company that served around 100,000 customers, for an unspecified amount.

Lala’s business model was a simple one. Keep the music in the cloud. Let the users hear it once for free. Then, charge them to either keep streaming it or download it as an MP3. What was the draw for users? Portability. Instead of downloading songs and albums to their own computer for synchronization to an MP3 player, Lala kept the music in the cloud, which made sure users never ran out of space.

When the purchase was announced in 2009, immediate speculation surrounded the possibility that Apple was planning a foray into the cloud-based music service, in order to better compete with similar services like Rhapsody and Spotify. The announcement to terminate the company’s services only seems to reinforce the idea that Apple is poised to join the streaming music business.

The generally-accepted school of thought is that Apple will launch its own web-based version of iTunes. By purchasing an already formed cloud, Apple stands to greatly reduce both the amount of time and money required to get its own, streaming music venture off of the ground. Successfully integrating streaming support for television shows and movies could also go a long way toward increasing Apple’s chances for success.

Apple did not provide any further comments on the matter. On the Lala homepage, visitors now see a notice stating the service will be shut down and that no new users are being accepted. Existing users with positive account balances can obtain a refund or have the amount transferred to their iTunes account.