CD-trading Site 'La La' Launches Beta with $9 Million in Venture Capital Funding

[mandy]

A new CD-trading website, launching Tuesday, could be the first of a new wave of sites that give consumers a way to legitimately get nearly free music.

The site, Lala.com, carries no inventory; it's more like eBay than used CD sites such as Djangomusic.com.

How it works: Users start by listing all their CDs. Then they look at menus of available CDs or through other people's CD collections, clicking on those they'd like to receive...

La La users get charged $1 for each CD they receive. They have to send a CD to get a CD...

full article: http://www.usatoday.com/tech/products/20...OE=TECISVA

According to the Recording Industry Association of America (RIAA) nearly 30,000 album titles are released each year. With nearly 3 million available titles, the largest reseller, Wal-Mart, stocks only about 5,000 titles per store or less than 1% of available music. With choice quickly disappearing, 'la la' opens the largest, most diverse music store on earth with 1.8 million album titles available for trade at $1 each - same price as a song download except the extra penny buys the rest of the album.

'lala.com' works like an online music co-op where members trade-in CDs they have for CDs they want from other members. CDs are sent through the mail in pre-paid envelopes provided by 'la la'. "Trading CDs is an affordable way to experiment and try new music," said Bill Nguyen, 'la la' co-founder.

If an album is not immediately available for trade, members will be able to buy the CD new or as a digital download at retail prices. Nguyen continued, "When you find that album you can't wait to enjoy, 'la la' will offer it as a new CD or a download."

First Sale Doctrine and Supporting Musicians Trading CDs has always been legal under the first sale doctrine codified in the U.S. Copyright Act. The doctrine allows the owner of a lawfully made CD to dispose of the possession of that copy without permission or payment of additional royalties to the copyright holder. As a result, musicians are not compensated from the sale of used CDs. Until now.

While there is no obligation to do so, 'la la' is setting aside 20% of trading revenues for musicians.

How Search Brought Back the Record Store Need help finding music? 'la la' is introducing the first community-based search engine to help discover music the old fashioned way - through conversation...

full press release: http://www.lala.com/site-down/About.html

[regic]

Not everyone is hot on the prospects for La La 

Is there some sort of rule that when discussing "new" dot com companies, the press is supposed to ignore the fact that they're nearly exact replicas of companies that were around during the first internet bubble? Or, even worse, are perfect replicas of companies already around? The latest is about a company called LaLa that is apparently positioning itself as a way to get "nearly free music." The specifics, however, show that this looks quite similar to plenty of other business models -- most of which didn't work. But that doesn't stop the press from writing glowing stories on the company that ignore both the inherent problems in the model as well as those who have gone before it.

full article: http://www.techdirt.com/articles/2006030...15_F.shtml

[bargainbloodhound]

It opens July 4th, but if you use the link below and click on the invite link you can take part in the beta (there are only a few thousand openings for the beta so... .  You also get a free CD)

http://blogs.usatoday.com/maney/2006/03/post.html#more

As a seller, it's basically useless for me unless I was able to find a bunch of rare CDs and trade some common ones for them...which is unlikely. 

The site is nicely done (as it should be for $9 million...actually it's extremely well done), and there are 1..4 million CDs available already.  The site will probably quickly attract a large (i.e. millions) number of users...but I'll agree with TechDirt that the business model of everything Web 2.0 is almost exactly the same as the original dot com models which failed. 

There is another similar site that opened last October called www.BarterBee.com for trading music, movies, games (and everything is also $1) but it didn't have the money behind it that LaLa does (and BarterBee only has a few thousand listings).

BarterBee topic http://community.tuliptools.com/index.ph...932.0.html

[bargainbloodhound]

Pay only $1 for CD!
Once you decide to start trading, you pay only for CDs received from your Want List. There are no hidden costs or monthly fees. Every CD you receive costs only $1 plus a standard shipping charge of $0.49. The number of CDs you receive will depend on how many CDs you ship to other members.

Easy Shipping
'la la' provides you with stamped envelopes, so all you need to do is drop your CD in the mail! You never pay anything to send CDs.

Your first shipping kits will arrive 3-5 days after you complete registration.

Sooo. $1.49 revenues per CD traded minus the shipping cost for each CD minus the cost of the envelopes for each CD minus the 20% of revenues they're donating to musicians leaves very little (if anything) to pay the cost of running the site, paying employees, advertising, etc....so I don't see how they can hope to turn a profit.  Or am I missing something?

[jezebel]

Sooo. $1.49 revenues per CD traded minus the shipping cost for each CD minus the cost of the envelopes for each CD minus the 20% of revenues they're donating to musicians leaves very little (if anything) to pay the cost of running the site, paying employees, advertising, etc....so I don't see how they can hope to turn a profit.  Or am I missing something?

You're not missing anything. 

[Kristijntje]

You're not missing anything. 

Except partnerships and deals with labels and record stores

Intriguingly, LaLa has set out to build relationships with the labels, and also operate as a marketplace for bricks and mortar records stores. That's going to be interesting, because LaLa and second hand stores could be really bad for each other. If LaLa is as successful as eBay, LaLa will decimate the used record store. And stores dumping unwanted inventory on LaLa will ruin the personal aspect of what makes LaLa good. We'll see.

Jewel cases, and the original artwork and liner notes inserts are not mailed 

There are two aspects to LaLa that are really strange. Firstly, you don't trade the jewel case and insert from your CD. This is by design: the plastic flip case that LaLa provides along with the flat cardboard prepaid envelope just don't have room for it.

If you don't think these are important parts of the experience, there's a chance you might soon realize just how important they are.

full article: http://www.theregister.co.uk/2006/03/07/lala_launch/

[regic]

Update: They burned through a total of $30 million in VC funding, were acquired by Apple in December 2009, and the site shut down on 5/31/2010

http://blogs.wsj.com/venturecapital/2009...lala-land/
http://news.cnet.com/8301-13579_3-20012445-37.html