Lala’s surprisingly controversial web song experiment is coming to an end. The music service announced today it will cease operations on May 30th. Nothing is known yet about how Apple, which acquired Lala in late 2009, plans to incorporate Lala into its iTunes media player and/or music store.

Lala introduced the web song in October 2008, calling it “the easiest, most affordable way to buy music on the Web.”

People who purchased ten-cent web songs – the right to stream a song without actually getting a file – will experience the unfortunate side of the digital music business: when a company goes out of business, sometimes your music goes along with it.

The question is how much people will miss those ten-cent, ephemeral songs. Will they wish they had purchased downloads instead? Back in May 2008, I wrote that ten cents is very little to lose in the event the company goes under.

[A]t ten cents each, I personally wouldn't worry about it. The loss of an infinite number of song streams is far better than the inability to play a purchased Windows Media file because Microsoft stopped supporting the DRM.


In a smart move – one that effectively raised the acquisition price – Apple is going to take a bit of the sting out of losing those web songs. Lala will issue to users a credit at iTunes for the value of all web songs purchased at Lala. Credits will be rounded up to the nearest dollar for amounts under $10 and rounded up to the nearest $5 for amounts greater than $10.

That move not only helps removes ill will Lala users will feel towards Apple for shutting down the service, but the credits also get Lala users into the iTunes store. Now, the dominant music retailer isn’t exactly hurting for business, but it would be a perfect opportunity to debut new cloud-based features to a crowd that has already shown a desire for them.

Though the loss of web songs may not be a major issue since there’s little evidence the web song really took off. A March 2009 article at BusinessWeek.com gave some rare statistics on the number of downloads and web songs being purchased. In both cases, conversion rates at or below 1%.

For every 1,000 songs streamed at Lala, users pay the 99¢ download fee for only 72 of them. They pay 10¢ for only 108 out of 1,000. The remaining 820 songs are played for free.