Reports: Apple Acquires Online Music Company Lala Media - Update

Apple Inc. (AAPL) has reportedly acquired online music company Lala Media Inc. for undisclosed terms, as it seeks to expand iTunes beyond being a predominantly download service for songs.

Palo Alto, California-based Lala offers access to more than 8 million sings, including tracks from EMI Music, Warner Music, Sony BMG Music Entertainment and Universal Music Group. The service lets users listen to any song on its site once for free. Customers can then opt to buy the track for $0.10 and listen to it on the Web.

The service differs from iTunes because the music is stored on servers via the so-called "cloud computing", instead of being downloaded to the user's computer. If customers decide to download a track, the cost is $0.79, compared with iTunes' price of $0.69-$1.29.

Internet search giant Google Inc (GOOG) recently partnered with Lala to provide users song samples along with links to purchase the music. Lala has also reportedly partnered with Facebook to offer music through the social networking site.

According to the Wall Street Journal, Lala is now developing an iPhone application that would greatly expand the service's reach, by making Lala Web songs available on the go via the phone's wireless Internet connection.

Apple's iTunes Store, which offers more than 11 million songs and has sold billions of tracks since its launch in 2003, has lately been facing increasing competition from other providers like Pandora, Lala and Spotify.

Although iTunes model has done well, it is seen as incomplete. Many people want to stream music any place and any time to any connected device. This allows digital consumers to rent music, which is then sent to them over the Internet "cloud" where it is stored on remote servers.

An acquisition of Lala may signal that Apple is more interested in creating a subscription service. It may also show Apple has decided that streaming media over the Web from servers is a model that will become more popular over time.

AAPL closed Friday's regular trading session at $193.32, down $3.16 or 1.61% on a volume of 29.54 million shares.

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