The company has reached an agreement with the fourth-largest music company, Warner Music Group, to sell nearly 200,000 songs from its catalog for 99 cents each. Members will also be able to play the Warner songs for free directly from the website, and the company will pay Warner a penny each time someone listens to a song. Executives are talking with the other big labels: Sony BMG, EMI and Universal.
The start-up is making some bold moves, and expects a loss of about $40 million over the next two years, in addition to the licensing fees estimated to be around $160 million over that time. The service is free and does not carry advertising, licensing costs of playing the music online is expected to be covered by selling songs which will contain digital rights management (DRM), although eventually they hope to sell DRM-free songs.
"This is a turning point for music companies and the entire industry," said co-founder Bill Nguyen, 36, who founded six previous startups, including several that went public and one that sold for $850 million (€630 million). "I have no idea if it will work — this is a bet."
To prevent illegal distribution through p2p networks, downloads will only be possible directly from the browser on to Apple iPods. Members would need to download a 3-megabyte plug-in, which runs on all major browsers on Windows and Macintosh computers. It looks very interesting indeed, however there seems to be a catch, apparently you need to set up your iPod to sync with Lala and you can't use the iPod with your iTunes again without reconfiguring it.