As Wired notes, Lala sells pre-paid chunks of music as credits rather than individual songs (although they sell those, too). Users pay 10 cents per song for permanent access to "web songs" that can be streamed but not downloaded.
And what do you call your favorite songs that you don't own but you have permanent access to? You call it "radio," folks. Except in radio's case it's the advertiser paying the 10 cents.
Lala can play the last few hundred songs from a cache when there’s no internet connection which lets it play cloud-based music in subways, highways and remote locations.
Cached music – no web access required. Sounds like radio to me.
The next version of iTunes could introduce more music fans to the idea of buying cheap music streamed from the cloud and listening to a huge catalog on a device with limited memory.
One of the big reasons people buy CD's or DVD's or books – even in this increasingly digital age – is the "collectible" aspect of the experience. You have something tangible to show for your effort. There's a kinesthetic value to the purchase.
Not so in the iTunes world, where the difference between "buying" a song and "renting" it for an infinite number of plays is really quite trivial, as long as you can access that song wherever you want it.
A move by Apple in the direction of streaming music easily and cheaply will dramatically blow up the market for online radio. This will increase the market for what radio stations offer online (whether or not radio will benefit from that broader market is a different question) while at the same time creating a highly attractive substitute for radio which, while not free, is customizable, relatively inexpensive, and perhaps every bit as ubiquitous as radio itself.
In the near term we will see this explosion of listener-paid models alongside an explosion of advertiser-supported ones. It will be critical not only to be a player in the online streaming game, but a player playing a game unique enough to attract an audience that can get the music part of you from countless places.
This will again push broadcasters to reconsider what their unique proposition is in the digital space. We will have to stream more things and more different things. We will have to stream much more non-music content and invest in such content. We will have to consider models which invite listeners to pay for such content (which, of course, public radio and Sirius has been doing for years).
While we obsess on whether or not iPods should contain FM receivers, Apple seems to be bent on turning the iPod itself into one big "FM receiver."
Just one that doesn't require "radio" or "broadcasters."