La La

Reuters reports that La La Media just announced their Series A round of funding from Bain Capital & Ignition Partners to the tune of $9 M.  La La is kind of a Peerflix for music CDs, except it's much easier for users to rip a CD to their hard drive and then exchange it than do the same with DVDs.   A few things are noteworthy about this announcement:

1. $9 Million is a really large Series A.  Either La la has some serious capital requirements or the VCs really needed to put money to work, or maybe I'm missing something.  At any rate, they'll be able to write a lot of code with that money.  I'm sure their founders have some serious entrepreneurial chops to do the raise.  They have set their exit bar high.  Good for them. 

2. They are devoting 20% of their revenues to go to recording artists so they benefit from follow-on sales of their records.  Note this is devoted to recording artists and not labels.  Smart move: even though they believe they're on the right side of the law, they're trying to defang any potential gripers by doing this, and I must say offering 20% of revenues as a voluntary royalty is probably unprecedented.  Anyone challenging them on this will appear greedy.

3. The Reuters article mentions that they're negotiating licenses from the labels to offer downloads.  Doesn't make sense to me.  It's a tough business to be in today if you're selling protected downloads that don't work on Apple's platform (which is to say every digital music retailer save for Apple).

4. Their founder entreats people to do the right, karmi thing and remove the songs from their computers and iPods before sending their physical CDs.  This is admirable but, unfortunately, I bet most users won't comply either out of ignorance or malfeasance.

Anyway, enough free advice for La La -- nice, catchy name btw.  I admire their approach and the chutzpah of their 20% solution.  Maybe I'll give it a whirl when they launch.       

Comments

[Bill Nguyen]

Thanks for the free advice. Shoot me an email and I'll invite you in - bill@lala.com. I admit, I'm not too bad at raising money, but you'll see as the year goes on way trading CDs is just a small step toward moving music from a mass market sales model to a direct marketing one. This should be be good for everyone; fans, artists, labels, and even retailers.