Lala – where music will stop playing …

In a brief message that was just posted on the Lala.com website, Apple has announced that the service will be shut down on May 31st, 2010. Apple will not be accepting new users, and existing users will be able to log in only until the end of next month.

Does this mean we can start raising our hopes for iTunes in the cloud?

At the bottom of a Wall Street Journal piece published back in January 2010, the paper suggested that Apple was gearing up to launch iTunes.com as soon as this June, citing sources familiar with the matter.

For an extensive view on how far-reaching that could prove to be, check out this guest post by Michael Robertson, the former CEO of MP3.com, who laid out Apple’s cloud-based media strategy going forward.

An iTunes-in-the-cloud offering – which is basically what Lala’s value proposition boils down to – is the central part of such an endeavor. Late last year, we wrote about how a move to the cloud was inevitable for iTunes. With the imminent shutdown of Lala, it’s safe to assume something is brewing at Cupertino.

Will Apple be the first company to turn online music subscription services into a sizable business?

Perhaps Apple, which acquired Lala late last year, will be making an announcement at its Worldwide Developers Conference, which will be held June 7 in San Francisco.

Update: here’s what it says when you’re logged in (click for larger image)

Update 2: and this is the email that was sent out to users:

Dear,

The Lala service will be shut down on May 31st.

In appreciation of your support over the last five years, you will receive a credit in the amount of your Lala web song purchases for use on Apple’s iTunes Store. If you purchased and downloaded mp3 songs from Lala, those songs will continue to play as part of your local music library.

Remaining wallet balances and unredeemed gift cards will be converted to iTunes Store credit (or can be refunded upon request). Gift cards can be redeemed on Lala until May 31st.

Click here or visit Lala.com/support for more information, or to view Lala’s Terms of Service.

Thank you.
Lala

(Thanks for the tip, Josh)

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Lala

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If there was any doubt that location-based services such as Foursquare, Gowalla and Hot Potato are the next hot web thing, the South by Southwest Interactive conference in Austin in March hammered the point home (Om has called 2010 “the year of location”). The annual gathering of technology geeks was the site of thousands of “check-ins” from different venues, and the emergence of “flash mobs” as all the attendees saw crowds forming at various spots and rushed to join them. Watching a time-lapse visualization of those check-ins is like watching the outbreak of a virus on a medical show, or the firing of synapses in a brain.

Foursquare has gotten the most attention of all the location-based mobile applications, with Gowalla and Brightkite taking second and third place, although Hot Potato is coming up in popularity quickly. In part, Foursquare’s profile is a result of having attracted the most users — it recently hit one million users, a number that doubled in less than three weeks, and it only launched a year ago. There have been unconfirmed reports recently that some Internet giants are looking to acquire the startup: one rumor has Yahoo looking to pay as much as $100 million for the company.

So there’s no question that such services are popular — but are they a business, or are they just a feature that belongs inside another business or service? And if they are a business on their own, how do they make money? I’ve explored these questions and more in a report for GigaOM Pro (subscription required), looking at the major players and their prospects. At the moment, none of them are likely generating much revenue, since they are focused on building out their user base, but several have signed deals with media companies and other partners. Foursquare has done deals with services such as Zagat, the travel guide company, as well as several entertainment companies including HBO and Warner Brothers — and recently formed a partnership with the Wall Street Journal.

Meanwhile, two of the giants of social networking — Twitter and Facebook — are also busy integrating location into their networks and services. Twitter has implemented geo-tagging of tweets, partly by buying MixerLabs for its geolocation API, and Facebook is widely expected to launch some form of location-based features (although it didn’t do so at its f8 conference, as some anticipated).

As Om described in a post earlier this year about location, many mobile industry insiders believe that location will eventually become a core offering of major platforms such as iPhone, Android and BlackBerry, or major web platforms such as Twitter or Facebook or Google. With that kind of integration, users will be able to use location in virtually any app — such as watching a movie and checking in with Flixster or checking in at a restaurant with your Urbanspoon app — instead of using a specific app like Foursquare or Gowalla.

For a more in-depth look at this market, see my GigaOM Pro report. We’re also discussing these issues and others at our GigaOM Bunker Session today; you can view a live stream of this exclusive event here.

Post and thumbnail photos courtesy of Flickr user Dunechaser

Dutch augmented reality startup Layar has launched a store for special layers of information and graphics that you can superimpose on the world around you through your cell phone. Augmented reality is a nascent technology that can make the real world resemble Terminator vision. (Imagine holding up your camera viewfinder and seeing content tags pointing out places to go.)

Publishers can create and sell special augmented reality layers that tag places with information like real estate listings or restaurants.

The store already has a few products. Travel-guide publisher Berlitz has an augmented reality layer pointing out hotels and places to shop, while EyeTour is selling an augmented reality layer for tourists in Puerto Rico. iPhone app E-Ticket is offering a similar layer for Disneyland and Disney World.

Layar will handle payment processing in multiple currencies and markets for both iPhones and Android devices. Right now, it’s using PayPal to support the U.S., U.K., Canadian and Australian markets.

Layar splits the proceeds with publishers 60-40. The company says the 40 percent it takes covers the legal, administrative and banking costs of running the store.

Free, cloud-based streaming music service Spotify, which is unfortunately still available only in Europe, has released a new version (0.4.3) of its desktop client. The new version introduces a number of improvements centered on music management and social sharing. The most important new feature is called the Library, which lets you import your own music into Spotify. Even better, you can copy music files to your mobile wirelessly, instead of having to connect via a USB cable. You can also star items in Spotify, effectively tagging your favorite tracks for inclusion in a special subfolder. As far as social features go, Spotify now offers Facebook integration. You can connect to Facebook in the application, which will instantly connect you with your Facebook friends who have selected that same feature. You can manage these from the new People sidebar at the right of the screen. You can also publish your Spotify profile to the web, send tracks directly to friends via the Inbox folder and showcase the music you’ve been listening in your Facebook feed. Check out a video highlighting some of the new features below.

One of the original pioneers in streaming music is still making waves.

Rhapsody released a new version of its iPhone app that allows people to wirelessly download playlists to their iPhones, iPods or iPads and listening to them whenever — even if they don’t have an Internet connection. The move comes just weeks after the company, which was revolutionary at the beginning of the decade for offering an all-you-can-eat subscription model, began life as an independent company after been spun-off from Real Networks.

The ability to cache playlists is a much sought-after feature that hadn’t yet landed in the U.S. before. Berkeley-based competitor MOG plans to launch this feature on both Android devices and iPhones with a $10 a month subscription service in the second quarter of this year. The much-hyped Swedish startup Spotify offers this already. But sadly, it hasn’t been able to cross the pond from Europe.

Rhapsody recently launched its first Android app and is at work building one for Blackberry devices. The company’s app is free, but to download playlists, users will have to pay either $10 a month for access from a single device or $15 for access on up to three devices (think computer, phone and iPad).

The company was spun-off from Real Networks about three weeks ago. Real and Viacom each own about 47.5 percent of the company. Vivendi’s Universal Music Group also owns a small stake of under five percent.

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With last week’s declaration by Twitter that it intends to start identifying places based on the coordinates of geo-coded Tweets, the location land rush is in full swing. A long list of companies including Twitter, Google, Foursquare, Gowalla, SimpleGeo, Loopt, and Citysearch are far along in creating separate databases of places mapped to their geo-coordinates.  Mapping businesses, in particular, to the GPS locations near where people are checking in, Tweeting from or pegging a photo is the first step to be able to show them geo-targeted ads, which could help fuel local mobile online advertising in a major way.

Here is the problem: These efforts at creating an underlying database of places are duplicative, and any competitive advantage any single company gets from being more comprehensive than the rest will be short-lived at best. It is time for an open database of places which all companies and developers can both contribute to and borrow from.  But in order for such a database to be useful, the biggest and fastest-growing Geo companies need to contribute to it.

I put this suggestion to Foursquare CEO Dennis Crowley the other night at a party, and he was enthusiastic about the idea. Foursquare is building up its own comprehensive database of places, which it calls “venues,” through its users who add places they want to check into, if they don’t already exist. Foursquare matches their GPS lat/long coordinates to its database of venues (businesses, points of interest, even people’s homes). Later I followed up by email and asked Crowley, “Isn’t the quality of your places directory, built by your users, a competitive advantage?” His response:

yeah, but so was the social graph. but facebook connect showed that things work better when we all play nice. the “facebook connect of places” would be amazing. not sure who will build it – goog, fbook, twitter, etc – but i bet you it’s a problem that’s mostly fixed by next year. there’s a lot of people working on this problem.

For what it’s worth, Twitter founder Jack Dorsey also happened to be in the room that night, and his reaction was a little bit more lukewarm and cautious. (I should note that Dorsey was not speaking in any official capacity for Twitter and this was just idle cocktail chatter).  But given Twitter’s recent moves to claim more parts of the Twitter eco-system for its own and the resulting controversy, it strikes me that Twitter could regain some lost developer goodwill by creating such an open database of places. I suspect Twitter does indeed want to create the “Facebook Connect of Places,” and open that up to developers through its APIs.  Mixer Labs, which it acquired, was certainly going in this direction with its GeoAPI, which Twitter is still supporting.  Hopefully, all the places data from geo-coded Tweets will go in there as well.

A Facebook Connect for places doesn’t quite go far enough.  Crowley’s analogy falls short because Facebook still controls the social graph. It exposes that social graph (the connection of its members to each other) to other Websites and developers, but other Websites cannot add to that social graph on their own. A truly open database of places should allow both give and take. It should be one that everyone can contribute to and nobody necessarily owns. Foursquare should be able to update it as easily as Twitter or Google, or any other Geo startup. The best data should prevail.

The counter-argument is that somebody—Twitter, Google, Facebook—needs to be in control of the database in order to ensure its quality.  If you let any random developer with a geo app update the database, it could end up being filled with inaccurate geo-data or worse, geo-spam.  I got the feeling Dorsey’s hesitation was partly due to such concerns.  But surely there are ways to design a places database which rewards good data over bad.  Maybe a place doesn’t become official until two or three contributing databases agree it is the same place, or based on the overall trustworthiness and historical accuracy of the source.

An open places database would also self-correct over time.  And companies could choose to refer to it only when a specific business or place is missing from their own vetted geo-directories.  In other words, let the best data prevail.  And instead of a dozen companies all building the same geo-directories, thousands could be innovating on top of an open database with new Geo services, advertising, and apps. It should just be part of the basic fabric of the mobile Web.

Image: Flickr/Nate Bolt

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SimpleGeo

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It is becoming alarmingly apparent that Foursquare is strongly considering a sale to Yahoo. As of the end of last week they had put the venture capitalists vying for their attention on ice. Those VCs happily provided term sheets valuing the company at $80 million or so. But in the meantime, Yahoo and maybe others expressed interest in the company, and are reportedly offering way above that $80 million.

There are so many reasons why this deal shouldn’t happen. Here are just a few:

1. It’s bad for Yahoo: Yahoo’s senior team is grasping at straws, and they desperately want to find a way to stay relevant. But this is not it. What the heck is Yahoo going to do with Foursquare that will somehow turn around their business? Absolutely nothing, that’s what. M&A for PR purposes is not what savvy executive teams do. Whatever tech cred they think they’ll get by buying Foursquare is in their imagination.

2. Yahoo is a horrendous choice for Foursquare. It’s where startups go to die. They’ve bought so many companies that were so promising, only to see them wither on the vine. And the founders always leave in disgust (see Flickr, Delicious and the rest in the left sidebar on their CrunchBase page – how many of these were successful?). And sometimes they buy companies just to shut them down entirely a year later. See Yahoo Kills Maven: From Acquisition To Deadpool In 17 Months Try to imagine what Facebook would be today if Yahoo had successfully acquired them in 2006.

3. You only sell now if you think your business doesn’t have legs. Aardvark did it because of very slow user growth and the founders got nervous. They were in a similar situation at Foursquare – lots of VCs ready to put in money at a great valuation, but they took the sale to Google instead. Now we’ll never know what Aardvark could have become had it stayed independent. Guys like Facebook and Twitter stayed independent despite outrageous acquisition offers. If the Foursquare team believes in their product, they should stay in the game.

4. The Dodgeball/Google debacle should have given founder Dennis Crowley enough of a taste of what happens to most companies when they get acquired. Dennis, remember when you wrote this – “It’s no real secret that Google wasn’t supporting dodgeball the way we expected. The whole experience was incredibly frustrating for us – especially as we couldn’t convince them that dodgeball was worth engineering resources, leaving us to watch as other startups got to innovate in the mobile + social space.” You sold your startup too soon once before. Why do it again now?

5. You can hedge. Lots of startups take money off the table in a venture round instead of selling outright. The WordPress guys did it, for example. The Aardvark team had the option of doing it. You can ask your VCs to redo their term sheets and double the amount raised. Take half off the table and you, your children and their children will never want for anything material in their lives, even if Foursquare goes south right afterwards.

Foursquare has a destiny. It may be to go out of business. It may be to go public and be a huge force in our culture. It may be something in between. But selling out now is like dropping out of college to take up drugs. Whatever you would have become, that isn’t what you’ll become once you sell out to Yahoo. Call Caterina from Flickr and ask her if she wishes she hadn’t sold to Yahoo. Call Joshua Schachter from Delicious and ask him the same thing. My guess is both will privately tell you NFW would they have sold to Yahoo knowing what they were stepping into.

Facebook and Twitter hitting the geo space must be a scary thing for a small startup to contemplate. But there’s real momentum and that intangible buzz behind your product right now. Play this out. In ten years, you’ll be glad you did. Unless you’re broke then because Foursquare failed, of course, and bitter that you didn’t take the money from Yahoo when it was offered. But there’s a reason why you became an entrepreneur and didn’t just stay a mid level developer grunt at a variety of large organizations. You have the fire to change the world. So go do it.

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Yahoo!

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RAIN 4/16: New rules for iPhone developers could limit metrics collected by ad networks
·Apr 16, 11:48 AM
Posted by: Michael Schmitt

WIRED: APPLE TO BAN 3RD PARTY AD NETWORKS FROM COLLECTING USER DATA, DELIVERING TARGETED ADS?

Along with announcing the coming iPhone OS 4.0 last week, Apple debuted their new ad delivery platform iAd (RAIN coverage here). Now, according to Wired, changes in Apple’s new developers’ agreement would limit the capabilities of third-party ad networks in iPhone, iPad and iPhone Touch applications. The new agreement states, “The use of third-party software in Your Application to collect and send Device Data to a third party for processing or analysis is expressly prohibited.” Wired’s Eliot Van Buskirk clarifies: “This clause appears to bar competing ad networks from collecting data about how users interact with in-app ads on the iPad, iPhone and iPod Touch, or targeting them with specific ad.”

So a third-party ad network like AdMob could embed an ad in an iPhone app, “but only if the advertiser didn’t care about who saw the ad, how long they may have looked at it, whether they interacted with it, or any of the other detailed metrics so prized by interactive marketers…the only way app developers will be able to advertise on Apple’s iPhone OS devices using more valuable ads that collect usage data will likely be to join iAd and cede 40 percent of ad revenue to Apple,” Van Buskirk writes (here). Developers also worry the changes could prevent them from collecting user data to just improve their apps. One developer, quoted by All Things Digital (here), says that, “It’s too early to tell…There’s more to understand about it, and we’re dialoguing with Apple about it, but it looks we may have to modify the way we collect and distribute information.”

How this might affect Internet radio apps is murky. Representatives from Ando Media said it appears the changes won’t affect the insertion of in-stream audio ads, as they are inserted prior to encoding the stream (outside the app, so to speak). Additionally, said CEO Robert Maccini, “We collect user data not from the application but from the stream/bandwidth provider in most cases so this should not limit our ability to collect audience data.” Other services like Pandora use Google’s AdSense to deliver display ads on the iPhone but it remains to be seen if Apple’s new rules will affect them in any way.

AD AGE SPOTLIGHTS NPR’S BALANCE OF OLD, NEW MEDIA

“National Public Radio is walking a tightrope,” writes Nicole C. Wong of Advertising Age,
alluding to the balance NPR has struck between old and new media. NPR’s dedication to new platforms and technology is clear (“There is no platform more conducive to mobile than radio,” said president-CEO Vivian Schiller, pictured left) but the trick is picking which new platforms to jump into.

Deciding to develop one of the first apps for Apple’s iPad appears to have been a good move, Ad Age reports, as one in five iPad owners have downloaded NPR’s app. Said Schiller, “The beauty of being on multiple platforms is it’s not like we’ve abandoned radio and will let it whither…We’ve got to keep innovating on those core platforms the same way we’re innovating on other platforms.” You can read the full article on NPR from Ad Age here.

NANCY PELOSI VOICES SUPPORT FOR PERFORMANCE ROYALTY

House Speaker Nancy Pelosi voiced her support for the Performance Rights Act while speaking at the Recording Academy’s Grammy on the Hill advocacy event. “The rights of performers are not forgotten,” she reportedly said. “You have an army of advocates by your side — from both parties — on Capitol Hill.” The Performance Rights Act would require radio broadcasters to pay a performance royalty like Internet and satellite radio. All Access has more coverage here.

STUDIES PREDICT GROWTH FOR ONLINE, MOBILE ADVERTISING IN 2010

Magna projects online advertising will grow by 12.8% in 2010, making it the fastest-growing segment in their “U.S. Media Advertising Revenue Forecast.” By comparison, radio is projected to grow 0.6% in 2010. Said Magna of the growth in online ads, “Much of this growth will be due to the increasing ease with which many advertisers — especially those who are endemic to the Internet as well as small and midsized companies — can accomplish their goals through digital media.” Radio Ink has more coverage here.

Meanwhile, Borrell Associates predicts mobile marketing will grow 84% annually, increasing from $2.7 billion last year to $57 billion by 2014. Local mobile advertising will double this year from 2009, reaching $586 million and growing to $4.7 billion by 2014. Read more from Borrell’s press release here.

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