LaLa.com is a startup that is currently running in beta. It takes some Netflix ideals, smashes them up with a little bit of Half.com, and they have a service that will allow the trading of CDs through their marketplace. Users sign up and list some of their CDs that they are tired of. They send them off to people who would like them, using LaLa’s prepaid envelopes. They earn credits so that they can request discs from other LaLa users.
There is a $1 transaction fee per trade and an additional $0.49 fee for the envelope. So, at the end of the transaction, you have traded an old CD that you presumably did not want any more, for another disc at a total cost of $1.50.
It sounds simple and perfectly legal, but there are some logistics and legalities that will probably come into play. First of all, if you trade a disc away to someone else, it is your responsibility to delete any additional copies of the music that you might have made legally when you were the owner. For example, if you have a ripped MP3 on your hard drive or MP3 player, you should not retain that digital file when you no longer own the physical CD. I am quite sure that this type of piracy will be rampant throughout the LaLa community as people just rip and trade.
This is a problem with no solution, though. At this point, there is really no way for anyone to identify these people. And these people already exist. They rip their CD collections and then sell the lot of them on Ebay or through Craigslist.
While LaLa doesn’t have a solution to this problem other than to request that users do the right thing, they are going to an unprecedented step to ensure that artists reap some of the spoils. We all know that the people who lose out when people deal music on the secondary market (ie Bay, used CD stores, etc) are the artists and their labels. They only make money on the sale of a brand new disc. Labels and artists are obviously not cut into the profits of eBay or your local used record store. What LaLa vows to do is to set aside 20% of their profits to give to the artists whose music was traded through their marketplace. While this doesn’t solve the legality issues, it at least helps compensate the artists.
LaLa has raised around $9 million in startup capital, but it remains to be seen how successful they can be and for how long. Some risks to their plan include the shift from physical media like CD’s to the non-transferable sort of media like digital downloads. What will they do when there are fewer CDs around in the marketplace? They can’t easily enter into movies because Peerflix is already doing this kind of a business in movies. Speaking of Peerflix, how hard would it be for them to move into music? Probably not all that difficult.
LaLa has its work cut out for it in this business, but maybe with their artist-first attitude they can attract the sorts of users who will be loyal. That might be their only chance for success.