April 30, 2010

By By Andre Paine, London

Streaming service Lala.com has announced it will be shutting down on May 31, 2010.

The announcement on its Web site has prompted speculation that Lala's owner Apple Inc. is ready to make use of Lala's staff and technology to roll out its own cloud-based service. Apple acquired Lala in December 2009 for an undisclosed sum.

The message states that "Lala is shutting down," adding that "Unfortunately, we are no longer accepting new users." Members can still log in and use the service until May 31.

The signs were there for an impending closure. This month Lala discontinued uploading songs through its Music Mover application and closed the beta testing for its iPhone app.

Lala launched in March 2006. It claimed to have 8 million licensed songs available for registered users.

It was reported that Apple acquired Lala for $80 million, although TechCrunch said it was actually much lower - $17 million. A proxy statement filed by Lala minority stake holder Warner Music Group later suggested it wasn't even as high as that.

From the email sent to Lala users:

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.

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