Thursday, May 31, 2007

Lala and Free Streaming Music On-Demand...

As described in this Techcrunch article, has announced that it will start offering free streaming music on-demand. This means that soon you'll be able to go to their website, choose any song from their catalog, and simply click to play it, legally and for free. Lala's plan for making money... if users buy only one CD per month on average from the site, their costs will be recouped.

A couple of observations: First, don't other websites already do this? I have some friends who signed up for MySpace accounts for the sole reason of being able to legally listen to their favorite artists' songs for free. Second, Lala's business model seems doomed to failure because, in the end, they are still relying on sales of music CDs in order to keep their business afloat. Why anybody would shell out money to purchase music while that same music is available legally and for free (and listed side-by-side) is beyond me. Third, even if Lala's new business model is capable of turning a profit, it still faces potentially massive institutional barriers, namely the RIAA lobbying to regulate internet radio and legal downloading services out of existence.

There is a different alternative model out there though: Offer legal, freely downloadable or streaming music without paying any royalties to the RIAA. A quick search at Creative Commons or BitTorrent sites like will reveal thousands of artists who allow the downloading of their music at no cost. The idea is that giving their product away for free is actually an extremely effective promotional tool, and will market the artist in such a way that will drive huge profits - not in CD sales, which stopped being a viable model about 7 years ago - but in concert ticket sales. Use the music to promote the concerts, instead of the other way around, and you'll experience the same successes that other bands who've "given it away for free", such as the Dave Matthews Band and Grateful Dead, already have.

But basing a 21st-century business on the selling of CDs? Are they serious?


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