Details have emerged that show that Apple might be looking to do a cloud-based digital music service as part of the bigger Apple iPad / iPhone offering, but not an all-in-one music subscription as earlier predicted. It might actually be part of Apple's MobileMe service.
MobileMe allows users to store their files in an online "storage locker," so they can access them from any computer they want to, be it an iPhone, home computer, iPad or work computer.
As the Financial Times pointed out, there's no reason for Apple to "cannibalize" its iTunes Store paid downloads for a subscription service that would produce thin profits, a la the story with Spotify, Pandora and MOG. Apple has a good thing going with music downloads through the iTunes Store, why would it kill it by offering a streaming music service that would take away from its paid music downloads?
Most of the streaming subscription music services struggle to make much of a profit, since they have a marginal business that barely squeaks by due to the high cost of licensing music. Major recording labels would like to continue to mine their copyrights to make money, and that means a high price tag for the use of their music.
The Wall Street Journal has unnamed but supposedly credible sources that claim the MobileMe theory is a good one, saying "MobileMe, part of an industry wave known as cloud computing, also could become a focal point for a new online music service that Apple has been developing for more than a year."
Apple bought Lala back in 2009, which fueled the idea that Apple might be looking to use Lala's technology as the backbone for this type of cloud-based digital music subscription service. The popular theory today is that Apple bought Lala to sideline it as a competitor, as a kind of "insurance." Lala was offering exactly this kind of service at the time and was years ahead of Apple, making it a prime competitor.