* A CD swapping service
Ever been to a swapmeet? Well here’s an online version of the idea: La-La, a CD swapping service that launched on June 8.
The way La-La works is simple: On the site, you list the CDs that you own and want to swap. You also list the CDs that you want to get.
When another user requests a CD you have, you ship it (that’s if you wish to, there’s no obligation to ship) using the postage paid shipping materials that are sent to you by La-La – you ship only the actual CD – shipping the artwork and liner notes is optional but requested by most La-La users.
Once shipped you get a credit (you are also awarded “karma” points for promptness which speeds up your transactions) and until you ship at least one CD you can’t receive any CDs.
If you request a CD and it is shipped, you pay $1.49 – the 49 cents is the actual shipping cost. The remaining $1 is split: 80 cents goes to the company and 20 cents goes to a fund called the “Z” Foundation that will “focus on providing health and dental care that is often inaccessible to working musicians” (see the “About ‘la la'” page, click on the link “‘la la’ news” and then on the second “Read All …” link).
Of the company’s 80 cents per CD share, 20 cents is planned as profit with the remaining 60 cents covering administrative expenses.
In the company’s “Z” Foundation press release it states that La-La expects to donate between $10,000 and $50,000 to the fund which means that the company anticipates that between 50,000 and 250,000 CDs will change hands monthly. This also means that it anticipates grossing between $0.894 million and $4.47 million per annum with a 20% gross profit on CD swaps alone.
Although La-La doesn’t currently show any advertising the potential for the company to generate more revenue this way is huge – just try the service (signing up is free) and you’ll see that users will have many page views with long page “dwell” times.
The user interface is pretty slick and uses AJAX to provide drop down lists for the artist and album entry fields that dynamically find matches based on whatever text you enter. The site’s database of artists and CD titles is huge so finding matches is usually very easy.
I entered a few CDs and within 12 hours had a request for one. The easiest way to get going would appear to be to list something that is likely to be popular because until you do ship a CD, you can’t receive anything.
La-La requires that you ship original CDs and asks that you do not ship CDs that have been ripped without deleting the copied tracks. They also don’t allow pirated CDs and they guarantee that the disks you get will be in good condition and skip free (if you do have a problem with a CD they credit your account with the $1.49 charge).
Now this business model isn’t original; Peerflix uses a similar model but with DVDs charging 99 cents per trade (the total cost to users is $1.38 for U.S. shipping and $1.50 for Canada). Unlike Peerflix’s early days, La-La appears to be bug free and work well.
A problem with Peerflix that was discussed a year ago in a Wired Magazine article was that users hold on to good titles (e.g. “The Rocky Horror Picture Show”) and are only willing to swap the “duds” (such as “Gigli”). The result has been that the system gets sucked dry of good content reducing its value to users.
I doubt whether the same problem will occur with La-La given the huge range of musical tastes and artists available – I contend that users in general have a broader range of tastes in music than they have in films.
What I think will be a problem with La-La and what may attract the legal jackals of the RIAA will be the users who rip, swap, and keep the ripped content.
Another issue pointed out by an article in The Register is that there’s a certain devaluing of the entire CD package due to the potential throwing away of the artwork and liner notes. It remains to be seen if that really is an issue; I suspect not.
La-La has so far received $9 million in investments from Bain Capital and Ignition Partners.
This is not only a company to keep an eye on but also a business model that bears watching.
