M+E Daily

Apple Shutting Down Lala; Cloud-Based iTunes Still Up In The Air

Streaming music service Lala, acquired by Apple in December, told users this morning that it will shut down on May 31, issuing iTunes Store credit to those who have purchased 10-cent streaming “web songs” on the site.

The news has tech blogs abuzz with speculation that the next move for Apple will be the introduction of an iTunes.com site, through which users will be able to access their digital media collections from any Web-enabled device. (MediaPost has a comprehensive roundup of the coverage.)

Blogs such as paidContent say that it’s high time for Apple to introduce a cloud-based media service, with the rise of Web-based streaming and consumer acceptance of subscription models. “iTunes’ a la carte reliance looks archaic and one-dimensional, tooled for a market that’s plateaued,” the blog asserts.

However, none of the techbiz pundits subject the profit potential of current streaming subscription models to too rigorous an analysis. The speculation seems to rest on the faith that if any company can build streaming entertainment into a bonafide business, it’s Apple.

But new streaming music licenses and back-end server capacity would need to be underwritten by some established product line. Netflix, for instance, is investing its savings from renegotiated DVD deals with studios into its streaming video offer. An analog between iTunes and music labels is not immediately apparent.

There is also the question of scale — just how large is the market opportunity for a virtual music locker room? Lala itself met with a certain measure of critical acclaim, but few iPod owners will even know to miss it.

Apple could render any speculation moot with an announcement at its Worldwide Developers Conference June 7. In any event, it seems better positioned to keep any plans for a streaming service under wraps than it was in keeping its next-gen iPhone out of the public view.