Apple acquired Lala on Friday, unlikely offering much for the streaming-music service.
Sources with knowledge of the discussion told me Apple is interested in bringing some of Lala's engineers onboard. According to the sources, Apple is impressed by Lala's technology. The 4-year-old Lala scans users' hard drives and creates a duplicate music library that they can access from Web-enabled devices. The company also sells songs for a dime each.
I posted a story on Friday about the acquisition talks. Apple declined to comment on "rumor and speculation" and a Lala spokesman did not respond to an interview request.
Over at The New York Times, Brad Stone posted a report citing sources who also said Apple had a special interest in obtaining Lala's engineering talent. But the Times also added this:
"The talks (between Apple and Lala) originated when Lala executives concluded their prospects for turning a profit in the short term were dim," Stone wrote. "(Lala) initiated discussions about a potential investment with Eddy Cue, Apple's vice president in charge of iTunes."
That Lala was struggling to turn a profit is consistent with the kind of bleak news that has come out of digital music the past year. Many of the newer and experimental business models, such as ad-supported music, have flopped. The only reasonable question now is how much longer will this shakeout continue?
We saw Ruckus falter and close in January. We saw SpiralFrog flameout spectacularly in March. In August, MySpace picked up iLike, and sources said that MySpace acquired Imeem last month, but the news has not been announced.
What seemed to be different about Lala is that the company had received positive reviews from the music labels for a long time. Executives at some of the biggest recording companies have told me in the past that they respected Lala's management and its focus on the bottom line. This spring, label execs said they saw some encouraging signs after Lala had revamped the service for seemingly the umpteenth time. It initially made a name for itself by trying to enable users to swap CDs over the Internet. It never went anywhere.
Then came the announcement in October that Google would offer Lala's music to users searching for information on music acts. That could mean a boon said some of the pundits. Apparently, by that time, Lala's fate was sealed.
So, we're kind of right back where we started. The only proven winners in digital music are Apple and download sales.
Michael Robertson, the serial entrepreneur and MP3.com founder, told me earlier this year that it doesn't matter if Imeem, Lala, and their competitors went away because there is always a new crop of players longing to jump into the music industry.
"It's sexy," Robertson said.
In that case, who's up next? Let's see your ideas and technology. Better bring a lot of nerve.