About this news article

Lala.com, a fairly well known online CD trading store, is launching an iPod-friendly music service where consumers can listen to music online for free or purchase them for direct download to an iPod.  Its music library will consist of artists from Warner Music Group, the 4th largest music company and is currently in talks with the other major record labels to expend its range of music.

One thing that comes as a surprise is that the music will be in the MP3 format, free of the DRM infection.  However, the catch is that music can only be downloaded directly to the iPod, which makes the service unsuitable for other MP3 players, PC playback or disc burning, since even if one knows how to extract music back off the iPod, they would need an iPod to start with anyway.  This method was agreed upon in an aim to prevent illegal distribution of its purchased music, while catering for the market leading brand of MP3 players. 

Unlike most streaming music services that are ad-sponsored, Lala's online streaming service is free without ads and relies on customers buying songs for profit and to cover the licensing costs of playing the music for free online.  Lala is currently backed by Bain Capital and Ignition Corp.  For direct to iPod downloading, its software synchronizes seamlessly with the iPod series, while still allowing the consumer to use iTunes.

From what I can see, even though the music provided lacks DRM, the service is actually more restricted than even iTunes' DRM infected tracks.  For example, even with iTunes' DRM infected tracks, its customers are entitled to burn their purchased tracks to CD as well as play them on their PC, unlike Lala new service, which restricts playback to an iPod only.   It is also unclear if the customer is entitled to download replacement tracks, such as if the iPod is accidentally blanked or if the iPod is lost or stolen. 

Thanks to GristyMcFisty for letting us know about this Reuters news report.