Apple's Purchase Price for Lala: $80 Million?

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macrumors bot
Original poster
Apr 12, 2001
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Media Memo reports that multiple sources are saying that Apple paid approximately $80 million in its acquisition of streaming music service Lala Media late last week.
Apple ended up paying around $80 million for the company, according to multiple sources. That's less than half of what investors valued the company at in 2008, but it's more than the $35 million the company raised throughout its life. Which means that some investors could get their money back and more.
The report notes that Warner Music Group had invested $20 million into Lala, but wrote down $11 million of that investment back in March. It remains unclear whether it will recoup its full $20 million investment with the sale or the smaller, post-write-down amount.

Lala reportedly possessed about $10 million in cash, meaning that it could have continued operating on its own for a significant period of time, but it appears that it sought a larger partner due to doubts about the company's ability to operate profitably as a stand-alone entity over the long-term.

Apple's exact motivation for purchasing Lala remains unclear, as some reports have suggested that Apple was primarily interested in the engineers behind Lala, while others have claimed that Apple is in fact looking to enter the streaming music business directly. Regardless of Apple's intentions, the purchase barely even dents its cash reserves, as the company reported approximately $34 billion in cash and cash equivalents at the end of its most recent quarterly reporting period.

Article Link: Apple's Purchase Price for Lala: $80 Million?
 

ntrigue

macrumors 68040
Jul 30, 2007
3,805
1
I think they purchased a competitor. I think they desire to stream entire albums to encourage purchases. It concerns me tray it only cost $80 million as they could let it die for that.
 

eme jota ce

macrumors regular
Jul 26, 2005
193
0
Chicago
If Apple were to open the iTunes store catalog to a monthly subscription service, similar to Rhapsody, I'd sign up (assuming it would play through Sonos :D )
 

Doctor Q

Administrator
Staff member
Sep 19, 2002
37,691
3,803
Los Angeles
For that low price they could have bought Lala just to silence a competing model!

But I think they wanted the people and the technology instead.
 

crackbookpro

macrumors 65816
Feb 25, 2009
1,097
0
Om nom nom nom
I have a good feeling Apple will spark some great new features from this buyout of lala.com.

I only see good things happening in the near future because of this! :D
 

JPark

macrumors 6502a
Jun 5, 2006
659
147
I think instead of clicking the "Purchase track from Lala" button, Steve accidently clicked the "Purchase Lala" button. He probably hasn't even noticed yet.:p
 

dernhelm

macrumors 68000
May 20, 2002
1,640
117
middle earth
Wonder if there were some patent issues here? Maybe Lala had some patent that Apple would need to license the rights to, and decided to buy them instead.

Seems unlikely, but who knows?
 

slu

macrumors 68000
Sep 15, 2004
1,636
107
Buffalo
Why is it that I had never heard of this company until all the "ZOMGWTFBBQ Apple bought Lala!!1!" blog posts came in?
Not sure. I have been using the service for a while and I love it. Being able to preview new albums in their entirety before a purchase is the killer feature, in my opinion.

The other great feature is that you can follow people, similar to Twitter, and see what new things they are listening to.

If you love to explore new music, Lala is the way to go. If you are one of those people who thinks no good music has been recorded in the last 25 years, it might not be for you.
 

*LTD*

macrumors G4
Feb 5, 2009
10,703
1
Canada
Interesting take

http://industry.bnet.com/technology...-its-consumer-tablet-cloud-to-kill-microsoft/

Steve Jobs’ plan to take back the personal computing business from Microsoft proceeding apace

"When it comes to understanding consumers and what they will want, Apple is one of the strategically smartest companies in the world. And the recently reported deal to acquire music streaming start-up Lala is another indication that the company is planning to become the central cloud for consumers," Erik Sherman writes for BNET.

"That raises some interesting questions about what the future of the company might be, because focusing on the cloud means realizing that business is beyond proprietary hardware and software. And the answer may be a clever marriage of open and closed, promoting Apple hardware and eventually making it king of the personal computer heap," Sherman writes.

"Why Apple might want a streaming company is head-scratching, in an odd kind of way" Sherman writes. "It should be crystal clear. An important business to them is selling access to downloading songs. Streaming media is a natural counterpoint, because there will be people who want the equivalent of a radio station, with a larger variety of music than the typical collection, and streaming should also lead to additional track sales. And if you can stream audio, why not video or e-books or any kind of media?"

Sherman writes, "This would also seem to logically tie to the big server farm that Apple is building in North Carolina... [Then] last month, we saw that Apple filed a patent on a way to force people to watch ads and which could be used to let a user obtain 'a good or service, such as the operating system, for free or at reduced cost.'"

"Time to tie it all together," Sherman writes. "You have streaming media, enforced ad-watching, and rumors of the new cheaper device coming out. So add it all up. How about advertising-supported streamed media that also ties in to subsidized hardware? And don’t assume that the media is just music."
 

bacaramac

macrumors 65816
Dec 29, 2007
1,413
78
If Apple were to open the iTunes store catalog to a monthly subscription service, similar to Rhapsody, I'd sign up (assuming it would play through Sonos :D )
I think Apple and Sonos should create a partnership and replace my Rhapsody on Sonos that I pay 12.99 a month for. If Apple could strike a deal and allow me to use Sonos, iPhone and iMac, that would be great.

That is the only thing missing is streaming music on the iPhone as I am not paying Rhapsody more to get the mobile app feature. Also, if Apple and Sonos hook up, I would get better integration of iTunes into Sonos.
 

tivoboy

macrumors 68040
May 15, 2005
3,130
210
pre-emptive

I think this was a pre-emptive strike. LALA was gaining a LOT of traction through their search integration and being able to play and stream with very few limits and for very low cost. LALA must have had some alternate contract deals with the music labels, which MAY now flow over the apple. That could be positive, but I think the largest motivator was keeping it away from goog or msft or yahoo.
 

DipDog3

macrumors 65816
Sep 20, 2002
1,181
670
I'll take the $80 million if they don't want it.

Really, is that a good deal?

How many employees did they have?
 

notatwork

macrumors newbie
Nov 4, 2009
22
2
Bye bye trading credits

My CD trading credits at LaLa (for discs that I sent out in trade, waiting for matches to my Wants List) disappeared with the acquisition. True cost: $80M + everyone's lost CD credits... :(
 

ryanw

macrumors 6502
Oct 21, 2003
307
0
"interest in engineering talent"

I'm guessing that someone misunderstood what they meant by "Apple's interest in LALA surrounds the assets". Someone probably understood that to mean the people that work there... because what other assets does LALA have other than people who work there? They have contracts that have been negotiated with the big much owners. These are contracts that they probably wouldn't have negotiated the same had they known that Apple was behind it.

So this buys apple into owning some of the largest streaming contracts in the industry, and now they have muscle to put behind it.
 

JonHimself

macrumors 68000
Nov 3, 2004
1,553
4
Toronto, Ontario
My CD trading credits at LaLa (for discs that I sent out in trade, waiting for matches to my Wants List) disappeared with the acquisition. True cost: $80M + everyone's lost CD credits... :(
They disappeared as in they're gone at this very moment? Or the disappeared as in you're speculating they will disappear?

I'm guessing that someone misunderstood what they meant by "Apple's interest in LALA surrounds the assets". Someone probably understood that to mean the people that work there... because what other assets does LALA have other than people who work there? They have contracts that have been negotiated with the big much owners. These are contracts that they probably wouldn't have negotiated the same had they known that Apple was behind it.

So this buys apple into owning some of the largest streaming contracts in the industry, and now they have muscle to put behind it.
I believe that part of the contracts Lala signed with the labels was that they were not transferable if Lala was ever to be bought out.
 

ryanw

macrumors 6502
Oct 21, 2003
307
0
I believe that part of the contracts Lala signed with the labels was that they were not transferable if Lala was ever to be bought out.
Non-Transferable is a strong word, but if LALA continues to operate those contracts, and they are not "transferred" then there is probably a lot of room in the contracts. If they dissolve the company and all become Apple, that would introduce more issues with the contracts for sure.
 
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