• Bloomberg at al., Monday, December 7, 2009 1:12 PM

Late last Friday, reports emerged that Apple had agreed to acquire music streaming and retailing site Lala.com for an undisclosed sum. Unlike Apple's iTunes, Lala lets users store their music libraries on its servers and access them on a variety of devices, from computers to mobile phones.

According to the Los Angeles Times, the news -- which has now been confirmed -- gives "analysts and journalists an excuse to engage in one of their favorite pastimes ... Guessing Apple's Strategy."

To wit, one expert suggests to Bloomberg News -- which broke the story -- that the move "may signal that Apple is more interested in creating a subscription service," since Lala users' streaming songs stay on Lala servers instead of their own hard drives.

But, "If that's what you think, then you're reading the tea leaves incorrectly," counters the Los Angeles Times, before explaining that Lala's business model is based on selling music on an a la carte basis, just like iTunes.

The New York Times positions the deal as "the most recent sign that Apple is looking at alternative ways for people to store and play their digital music," before noting that Lala's licenses for streaming music with major music labels are not transferable to any acquirer, "and its service has not been a hit with mainstream consumers."

Likewise, according to Variety, "Early coverage of the Apple-Lala deal was highly skeptical, since four-year-old Lala has not experienced much success in the marketplace," adding, "Warner Music Group, one of the initial investors in the site, wrote down more than half of its $20 million stake earlier this year."

So, what was Apple thinking? One person with knowledge of the deal tells the Times that the negotiations originated when Lala execs concluded that their prospects for turning a profit in the short term were dim, and that Apple's really only interested in Lala's engineers, and their experience with cloud-based music services.

At least according to PC World, "Lala might've been the biggest threat to Apple's iTunes with its free full-song previews and unlimited streaming for ten cents per track," and that the Palo Alto, Calif.-based startup hands Apple a number of interesting assets, including the ability stream entire songs for free, some rich social features, and a selection of some 8 million songs.

Read the whole story at Bloomberg at al. »