Via RockRap.com:
Music CD swappers turn to snail mail
Start-up lala.com will help, for a fee
By Hiawatha Bray, Boston Globe Staff | May 5, 2006
It may be a crime to swap digital music over the Internet, but there’s no law against doing it through the Postal Service. That’s the theory behind La La Media Inc., an Internet start-up that encourages music lovers to trade tunes by mail.
”People just really love Lala because it helps them discover so much music,” said Bill Nguyen, founder of the Hillsborough, Calif., company.
There are none of those free but illegal Internet file downloads. Nguyen’s lala.com website charges its members a small fee to barter the actual music disks among themselves.
Members publish ”have” lists of the music CDs they own. Because so many music lovers copy their CDs to their computers, lala.com provides software that can generate a list of albums on a computer’s hard drive.
In addition, users can log into the Lala website and type in the names of the albums in their collections. Users also create ”want” lists of CDs they’d like to own. Lala members can then search each other’s lists.
Members also get postage-paid mailing envelopes suitable for shipping CDs.
When a member sees a desired disk, he puts in a request for it. The owner can say no. But if the owner is willing, he or she drops the disk into an envelope, addresses it to the other member, and mails it. The recipient pays Lala $1, plus 49 cents for postage. There is no annual membership fee.
In a pure barter system, each party must have something the other wants, and that doesn’t always happen here. So Lala.com gives each member a credit for every disk sent to another member. Members can save credits for later use, and use them to trade with any other Lala member.
Lala.com won’t open to the general public until summer. But thousands of users have signed up as part of a test of the system.
Scott Sanders, a 30-year-old marketing analyst in Cambridge, signed up in March. He has swapped more than 35 CDs. ”There was some crappy stuff that I’d had since I was 16,” said Sanders, ”and somebody them wanted for some reason.” For instance, Sanders rid himself of a CD featuring prank phone calls. ”I was shocked that anybody else wanted that,” he said.
Marketing manager John Kuch estimates Lala has ”tens of thousands” of users, but he isn’t sure, because members can invite their friends, and Lala is generous about giving memberships to people who send requests by e-mail. But Nguyen said Lala’s CD inventory is surging, with members adding 30,000 listings every day.
The music industry, which says Internet music swapping has cost it billions in profits, hasn’t taken a stand on the legality of Lala.com’s business model. A spokesman for the Recording Industry Association of America refused to comment.
But Jim Gibson, director of the Intellectual Property Institute at the University of Richmond Law School, said Lala.com is on the right side of the law.
”It seems to be perfectly legal,” Gibson said, for the same reason that retailers can buy and sell used books and CDs. ”If you are the owner of a particular physical copy of a CD or a book or anything that’s copyrighted, you have the right to dispose of that CD or book any way you wish.”
Of course, a Lala member could swap away his old CDs while keeping digital copies on his hard drive or portable music player — probably a violation of copyright law.
Lala can’t prevent people from doing this, but in a message on the website, Nguyen urges customers to delete their digital copies of the albums they’ve traded away. ”I ask you to do your part by doing the right thing: remove songs from your iPod or PC if you’ve agreed to send the CD to another member,” he writes.
But it’s not clear if Lala users will follow Nguyen’s advice. Asked whether he was deleting all copies of his swapped CDs, Sanders replied, ”It’s something I don’t really feel comfortable answering one way or the other.”
Lala is hardly a shoestring operation. It’s funded by $9 million in venture money from Boston-based Bain Capital LLC and Ignition Partners of Seattle. With a staff of just 17 workers and low start-up costs, Nguyen predicted that Lala would soon be profitable.
But he plans to cut into those profits by paying 20 percent of the company’s income to the recording artists. Used-music dealers aren’t required to do this. But Nguyen said musicians too often get a raw deal from the industry, and wants Lala to do better.
”We’re trying to lead by example,” he said.
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