La La puts new spin on music biz

LOS ANGELES (Hollywood Reporter) - Not many startup businesses have been inspired by a rock band, but Fountains of Wayne is indirectly responsible for a newly launched music discovery and trading community called La La.

Company co-founder Bill Nguyen has been friends with the band since before the groups "Stacy's Mom" was a hit. They often commiserated over how online and physical retailers offer such a limited selection and how hard it is to discover new music.

Nguyen already had considerable success creating technology-based companies, so he harnessed his experience to start La La. Then he raised $9 million in first-round funding from Ignition Partners, Bain Capital and other investors.

"Music should be a communal social experience, but in today's world 40% of music is purchased at places like Best Buy," Nguyen said.

At first glance, http://www.LaLa.com looks like just a trading post. The service matches members' "have" and "want" lists to facilitate exchanges for a $1 fee plus 49 cents for the pre-paid shipping envelope. Members must sell an album to buy one.

Nguyen quipped that the price is the same as buying one song from iTunes or most other digital music services but then you get the rest of the album for a penny.

If the service can't find a match for a desired release, it offers to sell the release either as a physical CD or as a digital download at regular retail prices.

La La only deals in complete albums, however. "Selling one song at a time is like selling just one chapter of a book," Nguyen said.

Another unusual aspect of La La is its monetary support of musicians. Nguyen said the company reserves 20% of all trading revenues to financially reward those who made the music "with immense admiration and gratitude to musicians."

He also wants to implement a plan to encourage artists to post their own playlists by paying them 10% of any sales thus inspired.

Nguyen hasn't worked out distribution details yet but is in discussions with artists, labels and industry groups to devise a system.

The community aspects are equally important to Nguyen, who likens La La to an online version of a college dorm conversation.

Recommendations are based on trades and playlists, and Nguyen said the service's accuracy improves with time and frequency. He is more enthusiastic about personal recommendations, however. Members are encouraged to review albums and to open up their playlists and collections for others to browse.

La La is now in a test phase with membership on an invitation-only basis, limited to 1,000 people. Nguyen said its 250 members have traded more than 12,000 CDs since November and that nearly 2 million titles are in its listings. It is scheduled to go live in the next few months.

For those concerned about La La's legality, Nguyen cites the first-sale doctrine established in the U.S. Copyright Act as proof that trading used CDs is a legitimate activity.

Members also are reminded that they lose the right to keep any copies they have made once they get rid of the original. "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," Nguyen states in an online message to members.

Nguyen is best known for founding Seven, a software company enabling mobile e-mail access on a wide variety of mobile phones, and unified messaging specialist Onebox. Onebox merged with Phone.com in a deal worth $850 million.

Reuters/Hollywood Reporter

• Email Story
• IM Story
• Discuss
• Printable View

RECOMMEND THIS STORY

Recommend It:

Not at All Somewhat Moderately Highly Very Highly

Average (Not Rated)

» Recommended Stories