Dec 08, 2009

apple + lala

I’m enjoying the competing stories on just how much Apple paid for Lala:

If you’re Apple, you want to do as much as possible to signal a bargain-basement purchase price.

First, a high price would validate the online streaming / music locker in the cloud product category, which from a product strategy perspective is about as far away from the current iPod / iPhone / iTunes distribution model as you can get. If they paid a lot for Lala, it would be a strong signal that that model’s outdated, and that they needed to rush to market (buy v. build) a better model. Remember that Apple rarely admits product/technology mistakes; when they bring a key new capability to market they act like they were the first ones to think of it (see video iPods).

Next, if they’re planning additional acquisitions in the online music space, the last thing you want to do is telegraph a premium price on the first deal you do. It’s a lot easeir for their corp dev team to look the next startup in the eye and tell them “well, Lala had these assets (users, tech, data) and we bought them for $X, so you’re only worth $Y.”

Finally, keeping that category marginalized (“it’s just a technology purchase”) potentially gives them better bargaining power if/when they need to negotiate streaming licenses from labels. (Though I seriously doubt that Apple hasn’t already negotiated streaming licenses; the fact that Lala’s licenses aren’t transferable is a red herring.)

That’s not to say that AllThingsD is right and Techcrunch wrong, just that if you were Apple you’re not really motivated to brag about how much you spent on Lala.

Now Lalapple, bring on that iPhone app we’ve been hearing so much about.