Will LaLa.com Face The Music?
LaLa.com, based in Palo Alto, California, is a CD swapping service with more than 1.8 million album titles available for trade at $1 each. LaLa.com has amassed a huge music catalog with its members adding thousands of new titles every week. Joining the service is free.
On lala.com, members trade CDs they have, for CDs they want. Members receive a CD for every CD they ship to another member. CDs are sent through the mail in pre-paid envelopes provided by lala.com. For every CD received, members pay lala.com $1. LaLa.com voluntarily contributes 20% of its CD trading revenue to performing artists via their Z Foundation, a Charitable Foundation for Musicians. Lala.com also offers new full length albums and will sell full digital album downloads, but not individual singles. A move that makes no sense 6 years into the new millennium.
“After just three months of running an invite only beta, lala.com generated a tremendous amount of positive interest,” said Bill Nguyen, co-founder of lala.com. “Through word of mouth tens of thousands of music fans tracked down invites and joined our beta. Thousands more requested invites, so we decided to open lala.com to the public a month earlier than initially planned.”
However, the service is not the shiney, happy music utopia its founders make it out to be since it’s a very effective way to pirate music. Simply join the service, and start swapping CDs that you’ve already converted into digital files. Each new CD that your receive can then be ripped. Thus the cost per ripped CD is only $1.75 ($1 for LaLa and $0.75 for postage). Sure there’s plenty of retail stores that offer the same service, but they don’t have the distribution network of the Internet which will make the scope of this business a cause for concern for the Recording Industry Association of America (RIAA).
LaLa.com has attempted to be savvy in the construction of its business model. First and foremost, they have set up a “charity” that donates 20% of their proceeds to their Z Foundation. “The “Z Foundation will focus on providing health and dental care that is often inaccessible to working musicians,” says a press release from LaLa.com without further elaboration. That’s a beautiful thought, but what the RIAA is going to want is hard, cold cash.
In addition, LaLa will sell full albums and not downloads to further appease the majors. Again, nice thought, but way too obvious to make any real impression on the RIAA if LaLa.com grows into a major service, like NetFlix.
The Future: How low with the RIAA go?