Lala (website)
Encyclopedia
Lala was an online music store created by Silicon Valley
entrepreneur Bill Nguyen
. The service allowed members to legally create online shareable "playlists" (formerly known as "radio stations") of their own uploaded music which could play full length songs for other registered Lala members, purchase MP3
s, stream music on a one-time basis or as inexpensively purchased "web songs," buy new CDs from the Lala store, leave blurbs on other members' pages, and participate in the community forums. Lala contracted with major labels and offered a large catalog of albums to stream or purchase. Their home page claimed over 8 million licensed songs available.
Apple Inc. acquired Lala on December 4, 2009. On April 30, 2010, Lala announced it would be shutting down its service on May 31, 2010. They also announced they are "no longer accepting new users" and that users with credit would receive credit in Apple's iTunes
store instead.
Lala shut down as scheduled on May 31, 2010. However, it still served for a while as the music engine for Billboard.com, providing full-length previews of songs on the Top 100 chart. Now, Billboard.com uses MySpace Music as its provider.
, California
and was venture funded by Bain Capital
and Ignition Partners, as well as a recent $20 million investment by Warner Music Group Corp
. It was founded by serial entrepreneur
Bill Nguyen, along with Billy Alvarado, Anselm Baird-Smith, and John Cogan III.
The site launched in an invite-only beta phase on March 6, 2006. It officially launched in open-beta on June 8, 2006. By December 2006, there were around 300,000 members registered on Lala and over 500,000 CDs traded since the company's launch. The company had a staff of 23 people.
In 2007, La La media, Inc. introduced Lala 2.0, which moved the website's focus from trading used CDs to uploading MP3s and listening to free, legal, on-demand streaming of full length songs and albums. The listening feature was quietly discontinued a few weeks later without explanation to the site's user base.
The next version of the site, referred to as Lala 3.0, transitioned from closed beta testing to a general site rollout in open-beta mode in June 2008. The site was openly divided between trading members and non-trading members with different access to certain site features. Registered Lala members could stream songs or albums in their entirety once at no cost. Individual tracks could be purchased in MP3 format for 89 cents, or, for ten cents, members could purchase the right to stream a song from the website as many times as desired (referred to as a "web song"). All members could also upload their MP3 song libraries for personal web access from any computer.
In December 2009, Lala made the decision to close their trading service.
Lala.com was purchased by Apple, Inc. on December 5, 2009 for more than $80M.
On April 30, 2010, Apple announced that it would be shutting down lala.com entirely on May 31, 2010.
For the trading function, Lala made money by charging a fee for each disc a trading member receives (this fee was $1 per disc since the website's inception). Upon signing up for the trading service, a user would provide a credit card
number which was used for subsequent monthly billings. New traders received a packet of prepaid shipping envelopes and protective cardboard sleeves; new envelopes were provided as required while the user was expected to re-use the disc sleeves from discs they received.
Limits were placed on the number of discs a trader could have in transit in either direction at a given time. This protected not only Lala.com, but the recipients and shippers as well.
The website had a "buy new" feature which allows users to purchase new CDs directly from the Lala store at low prices (often at wholesale) through a partnership with retailer Newbury Comics
.
Lala.com also had a gift feature through which people were able to purchase CDs for other members directly from those members' want lists. The recipient was sent an email letting them know that a gift had been purchased for them, and the CD was automatically added to the recipient's Have list.
), Lala.com paid shipping costs, which were recovered as an additional fee to the trade brokerage fee.
As the site initially launched, members used envelopes pre-stamped with traditional postage (a $0.65 postage stamp
) and a $0.49 shipping charge was added for each received disc. In addition to the gap between the actual cost of envelopes and postage and the fee charged, this approach represented a significant potential for lost revenue, as members in possession of these envelopes might not use them or could misplace them, with the postage having already been spent. Another drawback to this system was that members often had to add postage if they were including CD cover art along with the CD they were sending.
Starting in July 2006 (August 2006 for existing members), Lala.com revised its shipping guidelines and began charging $0.75 per trade for shipping in addition to the $1 fee. The envelopes were charged postage only when mailed, similar in design to Business Reply
envelopes. The new shipping rate also allowed for members to send CD artwork without worrying about having sufficient postage.
In April, 2006, Omnilala filed for trademark protection for its mark "LALA" for use in music-streaming services and web-based entertainment. La La Media filed a lawsuit to cancel Omnilala's "LALA" trademark (see Trademark Trial and Appeal Board Cancellation No. 92048521).
In late May 2008, Lala.com blocked international users from accessing their already purchased content. Refunds were issued when requested. However, users from other countries could still access their songs if they used an American based web proxy
.
, Ohio
radio station WOXY.com.
The investment allowed WOXY.com to go back on the air after a brief suspension of broadcasting. Both sites cross-promote the other; Lala.com promotes the station, and WOXY advertises music that is for sale (or trade) produced by some of the independent artists that WOXY features. In February 2009, LaLa sold Woxy.com to Future Sounds, Inc., an organization that aired programming on WOXY.com.
Silicon Valley
Silicon Valley is a term which refers to the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology corporations...
entrepreneur Bill Nguyen
Bill Nguyen
Bill Nguyen is a technology entrepreneur who founded Lala.com, Color, and Onebox.-Life:He grew up in Houston, the son of Vietnamese immigrants whom he says he consistently disappointed. They wanted him to score A's. Instead, he scored an unpredictable mix of A's and F's, and earned a 1.4 grade...
. The service allowed members to legally create online shareable "playlists" (formerly known as "radio stations") of their own uploaded music which could play full length songs for other registered Lala members, purchase MP3
MP3
MPEG-1 or MPEG-2 Audio Layer III, more commonly referred to as MP3, is a patented digital audio encoding format using a form of lossy data compression...
s, stream music on a one-time basis or as inexpensively purchased "web songs," buy new CDs from the Lala store, leave blurbs on other members' pages, and participate in the community forums. Lala contracted with major labels and offered a large catalog of albums to stream or purchase. Their home page claimed over 8 million licensed songs available.
Apple Inc. acquired Lala on December 4, 2009. On April 30, 2010, Lala announced it would be shutting down its service on May 31, 2010. They also announced they are "no longer accepting new users" and that users with credit would receive credit in Apple's iTunes
ITunes
iTunes is a media player computer program, used for playing, downloading, and organizing digital music and video files on desktop computers. It can also manage contents on iPod, iPhone, iPod Touch and iPad....
store instead.
Lala shut down as scheduled on May 31, 2010. However, it still served for a while as the music engine for Billboard.com, providing full-length previews of songs on the Top 100 chart. Now, Billboard.com uses MySpace Music as its provider.
History
La La media, Inc. was based out of Palo AltoPalo Alto, California
Palo Alto is a California charter city located in the northwest corner of Santa Clara County, in the San Francisco Bay Area of California, United States. The city shares its borders with East Palo Alto, Mountain View, Los Altos, Los Altos Hills, Stanford, Portola Valley, and Menlo Park. It is...
, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
and was venture funded by Bain Capital
Bain Capital
Bain Capital LLC is a Boston-based private equity firm founded in 1984 by partners from the consulting firm Bain & Company. Originally conceived as an early-stage, growth-oriented investment fund, Bain Capital today manages approximately $65 billion in assets, and its strategies include private...
and Ignition Partners, as well as a recent $20 million investment by Warner Music Group Corp
Warner Music Group
Warner Music Group is the third largest business group and family of record labels in the recording industry, making it one of the big four record companies...
. It was founded by serial entrepreneur
Entrepreneur
An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative.The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to...
Bill Nguyen, along with Billy Alvarado, Anselm Baird-Smith, and John Cogan III.
The site launched in an invite-only beta phase on March 6, 2006. It officially launched in open-beta on June 8, 2006. By December 2006, there were around 300,000 members registered on Lala and over 500,000 CDs traded since the company's launch. The company had a staff of 23 people.
In 2007, La La media, Inc. introduced Lala 2.0, which moved the website's focus from trading used CDs to uploading MP3s and listening to free, legal, on-demand streaming of full length songs and albums. The listening feature was quietly discontinued a few weeks later without explanation to the site's user base.
The next version of the site, referred to as Lala 3.0, transitioned from closed beta testing to a general site rollout in open-beta mode in June 2008. The site was openly divided between trading members and non-trading members with different access to certain site features. Registered Lala members could stream songs or albums in their entirety once at no cost. Individual tracks could be purchased in MP3 format for 89 cents, or, for ten cents, members could purchase the right to stream a song from the website as many times as desired (referred to as a "web song"). All members could also upload their MP3 song libraries for personal web access from any computer.
In December 2009, Lala made the decision to close their trading service.
Lala.com was purchased by Apple, Inc. on December 5, 2009 for more than $80M.
On April 30, 2010, Apple announced that it would be shutting down lala.com entirely on May 31, 2010.
Original business model
The original primary function of the website was brokering trades of CDs between users. After a few years, the company shifted its main focus to uploading MP3s, listening, and buying instead of trading.For the trading function, Lala made money by charging a fee for each disc a trading member receives (this fee was $1 per disc since the website's inception). Upon signing up for the trading service, a user would provide a credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
number which was used for subsequent monthly billings. New traders received a packet of prepaid shipping envelopes and protective cardboard sleeves; new envelopes were provided as required while the user was expected to re-use the disc sleeves from discs they received.
Limits were placed on the number of discs a trader could have in transit in either direction at a given time. This protected not only Lala.com, but the recipients and shippers as well.
The website had a "buy new" feature which allows users to purchase new CDs directly from the Lala store at low prices (often at wholesale) through a partnership with retailer Newbury Comics
Newbury Comics
Newbury Comics is a New England-based music retailer. Newbury Comics began as a comic book vendor on Newbury Street in Boston. The company was founded in 1978 by Massachusetts Institute of Technology students John Brusger and Mike Dreese. Over the next few years, the focus of the company changed...
.
Lala.com also had a gift feature through which people were able to purchase CDs for other members directly from those members' want lists. The recipient was sent an email letting them know that a gift had been purchased for them, and the CD was automatically added to the recipient's Have list.
Shipping costs
Unlike other sites which facilitate direct sales between users (such as Half.comHalf.com
Half.com is a subsidiary of eBay, in which sellers offer items at fixed prices, usually items that have a UPC, ISBN or other kind of SKU, rather than rare, old or collectible items...
), Lala.com paid shipping costs, which were recovered as an additional fee to the trade brokerage fee.
As the site initially launched, members used envelopes pre-stamped with traditional postage (a $0.65 postage stamp
Postage stamp
A postage stamp is a small piece of paper that is purchased and displayed on an item of mail as evidence of payment of postage. Typically, stamps are made from special paper, with a national designation and denomination on the face, and a gum adhesive on the reverse side...
) and a $0.49 shipping charge was added for each received disc. In addition to the gap between the actual cost of envelopes and postage and the fee charged, this approach represented a significant potential for lost revenue, as members in possession of these envelopes might not use them or could misplace them, with the postage having already been spent. Another drawback to this system was that members often had to add postage if they were including CD cover art along with the CD they were sending.
Starting in July 2006 (August 2006 for existing members), Lala.com revised its shipping guidelines and began charging $0.75 per trade for shipping in addition to the $1 fee. The envelopes were charged postage only when mailed, similar in design to Business Reply
Freepost
Freepost is a postal service provided by various postal administrations, whereby a person sends mail without affixing postage, and the recipient pays the postage when collecting the mail...
envelopes. The new shipping rate also allowed for members to send CD artwork without worrying about having sufficient postage.
Legal issues
Lala.com's terms and conditions included a provision warning the user that it was illegal to retain MP3 files of a CD once it had been traded. If a user no longer owned the CD, he or she no longer had rights to derivatives of the CD.In April, 2006, Omnilala filed for trademark protection for its mark "LALA" for use in music-streaming services and web-based entertainment. La La Media filed a lawsuit to cancel Omnilala's "LALA" trademark (see Trademark Trial and Appeal Board Cancellation No. 92048521).
In late May 2008, Lala.com blocked international users from accessing their already purchased content. Refunds were issued when requested. However, users from other countries could still access their songs if they used an American based web proxy
Proxy server
In computer networks, a proxy server is a server that acts as an intermediary for requests from clients seeking resources from other servers. A client connects to the proxy server, requesting some service, such as a file, connection, web page, or other resource available from a different server...
.
Lala.com and WOXY.com
Nguyen and his website were highlighted in the news in October 2006, when Nguyen announced his investment in Internet-based CincinnatiCincinnati, Ohio
Cincinnati is a city in the U.S. state of Ohio. Cincinnati is the county seat of Hamilton County. Settled in 1788, the city is located to north of the Ohio River at the Ohio-Kentucky border, near Indiana. The population within city limits is 296,943 according to the 2010 census, making it Ohio's...
, Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
radio station WOXY.com.
The investment allowed WOXY.com to go back on the air after a brief suspension of broadcasting. Both sites cross-promote the other; Lala.com promotes the station, and WOXY advertises music that is for sale (or trade) produced by some of the independent artists that WOXY features. In February 2009, LaLa sold Woxy.com to Future Sounds, Inc., an organization that aired programming on WOXY.com.
External links
- Official website
- WOXY.com
- Lala.com's page at MySpaceMySpaceMyspace is a social networking service owned by Specific Media LLC and pop star Justin Timberlake. Myspace launched in August 2003 and is headquartered in Beverly Hills, California. In August 2011, Myspace had 33.1 million unique U.S. visitors....
- Smith, Ethan. Listen to Music Free, but Pay to Carry, The Wall Street Journal, June 5, 2007
- Murphy Barret, Victoria. You Ain't Heard Nothing Yet, forbes.com, November 27, 2006.
- Lala owes me 60 cents; March 2007