CUPERTINO, Calif. (
) -- On a mission to beef up its iTunes sector,
digital music service
for an undisclosed fee.
iTunes, a downloadable music store, gains a foothold in the streaming market through the Lala deal, which could boost Apple's digital music revenue.
Lala.com launched just over a year ago and offers about 8 million songs. According to the startup's Web site, users can listen to a song in full before buying. Lala charges customers 10 cents for unlimited plays of a song and an additional 79 cents for an MP3 download.
Apple's iTunes sells downloads of songs for 69 cents, 99 cents, or $1.29.
Apple describes iTunes as the world's largest music retailer, encompassing more than 11 million songs, 50,000 TV episodes, and 7,500 films. Customers have bought more than 8 billion songs from iTunes since its launch in 2003.
While details on iTunes user spending is hard to come by, Apple CEO Steve Jobs said in 2007 that the average iPod customer had bought 22 songs from iTunes. Lala could help Apple increase its revenue-per-user by opening up the streaming market.
Research from money management specialist
estimates that the average iTunes user spends $7 per transaction. Customers of music service Napster spend $15 per transaction. And each year, Lala users spend an average of $67 on its music service, according to CEO Bill Nguyen.
Apple is keen to keep its
brand fresh. The firm recently introduced
of iTunes, which, for the first time, allows users to transfer content between computers in their homes.
According to NPD Group, Apple owned 69% of the digital music market in the first half of 2009, followed by
MP3, which accounted for 8%. Clearly, though, there is room for growth as Apple attempts to lure users away from more traditional music technology.
The NPD Group says that CDs accounted for 65% of all music sold in the first six months of the year, with digital downloads making up the rest.
Apple shares dipped $2.56, or 1.32%, to $190.76 shortly after market open on Monday, despite a slight uptick in tech stocks that saw the Nasdaq gain 0.05%.
-- Reported by James Rogers in New York