Apple’s recent purchase of music streaming service Lala – not officially confirmed by either company but seen as a done deal by inside sources – may seem curious, but a source told Reuters: "Apple recognizes that the model is going to evolve into a streaming one and this could probably propel iTunes to the next level.”
On Monday, Ars Technica weighed in with some thoughts on why Apple made the purchase and what it will do with the company: “Apple has also been rumored to be testing a streaming service for video content; adding music to the menu seems like an obvious choice,” it said.
Looking closer at the situation reveals some interesting questions, Ars Technica went on to note: “If Apple is already testing a functional streaming service, there seems to be little need to buy an entire company to obtain similar technology. In fact, Lala uses Flash for wrapping its streams, and Apple has been notably averse to using that software for just about anything.”
In addition, Ars Technica said that there could be hiccups with Lala’s streaming license, which is non-transferrable and currently US-only, so Apple would have to enter into new negotiations with the music industry, as well as navigate licensing agreements in the many countries in which it does business.
However, Ars Technica mused that Apple could have wanted Lala for its engineering talent, as was the case with its PA Semi acquisition. Lala’s terms of service don’t obligate it to keep its site or services running indefinitely, and a New York Times report last Friday said that Lala approached Apple about the buyout because it wasn’t about to become profitable any time soon, which means Apple could have made the acquisition without putting much of a dent in a cash hoard that’s currently north of $20 billion.