Lala (website)

Infobox website
url = http://www.lala.com
name = lala.com
origin = Palo Alto, California


commercial = Yes
type = Online music distribution
registration = Required
location = Palo Alto, California, USA
owner = lala media, inc.
author = lala.com

lala.com is a Compact Disc trading website created by Silicon Valley enterpreneur Bill Nguyen. (Note that Lala is actually the registered trademark of another company, omnilala inc., also in the digital music server space). The service allows trade-enabled members to legally trade original CDs by USPS mail for $1 per trade plus 75¢ postage, create online sharable "playlists" (formerly known as "radio stations") of their own uploaded music which can play full length songs for other registered lala members, purchase MP3s, 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. New members can upload their own music, create playlists, purchase MP3s and web songs, buy new CDs at the lala store, leave blurbs, and can change their personal account settings to activate trading privileges and also be able to trade CDs and use the community forums.

La la media, inc. also owns online radio station WOXY.

History of company and website

La la media, inc. is based out of Palo Alto, California and is venture funded by Bain Capital and Ignition Partners, as well as a recent $20 million investment by Warner Music Group Corp [http://www.thedeal.com/techconfidential/the-note/the-note/warner-music-filing-reveals-15.php] .. It was founded by serial entrepreneur Bill Nguyen, along with three other known founders.

The site launched in an invite-only beta phase on March 6, 2006. It officially launched in open-beta on June 8, 2006. As of December 2006 there were around 300,000 members registered on lala.com and over 500,000 CDs traded since the company's launch. The company has a staff of 23 people.

In 2007 La la media, inc. introduced Lala.com 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. [http://arstechnica.com/news.ars/post/20070604-lala-to-open-drm-free-digital-music-store-with-free-streaming-access-to-songs.html] The listening feature was quietly shuttered a few weeks later without explanation to the site's user base. [http://arstechnica.com/news.ars/post/20070703-the-day-the-music-died-lalas-free-streaming-goes-dark-will-return.html]

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 is now openly divided between trading members and non-trading members with different access to certain site features.

All registered lala members can stream songs or albums in their entirety once at no cost. Individual tracks can be purchased in MP3 format for 79 cents, or for ten cents, members can purchase the right to stream a song from the website as many times as desired (referred to as a "web song"). All members also can upload their MP3 song libraries for personal web access from any computer. Non-trading members have a feedback forum which is not visible to trading members, and non-traders are restricted from viewing the have and want lists of trade-enabled members, or from seeing that trading exists at all, unless they come across the option to enable it in their account settings. Non-trading members are also not allowed to see the main community forums or the traders' feedback forum unless they activate the trading option in their account settings. Trading members are able to see everyone's have and want lists and have access to the main community forums, which also include a "bug" forum to report problems with site features and usage.

Lala has contracted with major labels and offers a large catalog of albums to stream or purchase. Their home page claims 5 million licensed songs available.

In Lala 3.0, CD trading continues, but those members who participate in the community forums report that the pace of trading appears to have declined due to the de-emphasis of trading as the site's main focus.

Trading system

The original primary function of the website was brokering trades of CDs between users. As of this time, however, newly-registered members must manually activate the trade setting in their accounts instead of being automatically trade-enabled at the time of registration. The company has shifted its main focus to uploading MP3s, listening, and buying instead of trading.

Business model

The site now makes money by the sale of MP3s, web songs, and new CDs as described above. For the trading function, lala makes money by charging a fee for each disc a trading member receives (this fee has been $1 per disc since the website's inception). Upon signing up for the trading service, a user provides a credit card number which is used for subsequent monthly billings. New traders receive a packet of prepaid shipping envelopes and protective cardboard sleeves; new envelopes are provided as required while the user is expected to re-use the disc sleeves from discs they receive.

Limits are placed on the number of discs a trader may have in transit in either direction at a given time. This protects not only lala.com, but the recipients and shippers as well.

The website has 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 has a gift feature through which people are able to purchase CDs for other members directly from those members' want lists. The recipient is sent an email letting them know that a gift has been purchased for them, and the CD is automatically added to the recipient's Have list.

Shipping costs

Unlike other sites which facilitate direct sales between users (such as half.com), lala.com pays shipping costs, which are 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 now used are charged postage only when mailed, and are similar in design to Business Reply envelopes. The new shipping rate also allows for members to send CD artwork without worrying about having sufficient postage.

Legal issues

Lala.com's terms and conditions include a provision warning the user that it is illegal to retain MP3 files of a CD you have shipped. If you no longer own the CD, you no longer have rights to derivatives of the CD. Additionally, although la la media, inc. has expressed respect for copyright, one wonders about trademarks -- "LALA" is actually the registered trademark of omnilala, inc., a Massachusetts start-up, first registered for digital audio servers to stream playlists to the Internet. Omnilala, which started in 2003, filed its trademark application in May 2004, well before Nguyen and team launched "lala.com", and Omnilala received the registration in December 2005. In April, 2006, Omnilala filed for trademark protection for its mark "LALA" for use in music-streaming services and web-based entertainment -- again long before la la media entered this space. La la media's has 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 out of their already purchased content. Refunds were issued when requested. Users from other countries can still access their songs if they use a web proxy that is based in the USA.

Lala.com in the news

Nguyen and his website were highlighted in the news in October 2006, when Nguyen announced his investment in Internet-based 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. [http://news.enquirer.com/apps/pbcs.dll/article?AID=/20060927/BIZ01/609270331/1076/rss01]

On June 5, 2007, Lala.com was featured in the Wall Street Journal in an article discussing its expansion into digital music. It was stated that Lala.com is unique in its ability to deliver mp3 files that play on iPods.

Z Foundation

The Z Foundation is a non-profit organization set up by Lala.com. Initially, the Lala.com FAQ claimed that the purpose of the Foundation was to provide an artist with 20% of the trading fee each time his or her CD was traded through the site, and the site's prepaid envelopes carried the blurb, "Artists receive 20% contribution." [http://digitalaudioinsider.blogspot.com/2007/03/lalacom-owes-me-sixty-cents.html]

That goal apparently evolved, and the Z Foundation became an avenue to provide affordable health care to working musicians. Twenty percent of the site's trading revenue, as well as monthly contributions from Lala.com itself, are used to fund the charity. [http://www.lala.com/frontend/action/z]

However, Lala.com seems to have shelved the project for the time being, as all links to the foundation have been deleted from the homepage. As of February 2008, it is unclear if the Z Foundation still exists.

External links

* [http://www.lala.com/ lala.com] lala.com Homepage
* [http://www.woxy.com/ woxy.com] woxy.com Homepage
* [http://www.myspace.com/lalamedia myspace.com/lalamedia] lala's myspace page
* [http://online.wsj.com/article/SB118100454736824471.html The Wall Street Journal Online; Listen to Music Free, but Pay to Carry; Ethan Smith; June 5, 2007]
* [http://www.forbes.com/free_forbes/2006/1127/087.html You Ain't Heard Nothing Yet, Victoria Murphy Barret, November 27, 2006]
* [http://digitalaudioinsider.blogspot.com/2007/03/lalacom-owes-me-sixty-cents.html Lala owes me 60 cents; March 2007]